LAKEVIEW — While state funding is still pending approval in the next legislative session, Lake County has secured funding alternatives for railroad line upgrades to commence in anticipation of Red Rock Biofuels beginning operations next spring.
Earlier this year the U.S. Department of Transportation’s Federal Railroad Authority (FRA) approved $5.6 million in grant funds for freight rail system upgrades in Lake County through the Consolidated Rail Infrastructure and Safety Improvements (CRISI) program – called “The Build America Grant.” The CRISI grant requires a $5 million match, $1.4 million of which is dedicated from construction of a new rail spur connecting to the main line at the currently under construction Red Rock Biofuels facility on the south end of Lakeview.
An additional $3.12 million was expected in matching funds from the Oregon State Legislature, but those expected funds have been pushed until the next legislative session, in part due to unexpected delays after the State Senate was brought to a halt by Republican-led walkouts and contentious protests on unrelated votes earlier this year. The State of Oregon has already invested heavily in the Red Rock Biofuels project, approving $245 million in bonds last year for its construction.
Lake loan program
In an effort to secure placeholder funding to proceed with rail upgrades while awaiting legislative approval to cover the remainder needed for matching funds, Lake County Commissioners approved a loan program through Business Oregon in partnership with Goose Lake Railway – operators of the Lake County rail line – in October. The Business Oregon loan approval serves as a backup plan should legislative funding not be approved so that construction can commence on rail lines, and if triggered would establish a 20-year agreement between Lake County and Goose Lake Rail to repay the loan amount in full.
According to Goose Lake Rail co-owner Bruce Addington, railroad maintenance fees assessed per rail car would cover the cost of the incurred debt over 20 years with the addition of Red Rock’s operations, should the loan funds be necessary.
Currently the rail line does not extend north beyond Lakeview. Built in the early 20th century, the railroad connects from the northern end of Lakeview south to Alturas, carrying freight currently from other clientele based in Lakeview – Cornerstone Mineral and Collins Pine. Originally the narrow-gauge rail line, built in 1909 and known as the Nevada-California-Oregon railway (NCO), was intended to travel as far north as Shaniko, thereby connecting with other regional rail lines across Oregon. Numerous derailments and mismanagement in its early years, however, prevented the rail line from expanding beyond Lakeview.
When Red Rock opens, expected to be in operation by April, an estimated 15 million gallons of biofuels will be shipped annually from the Lakeview facility on the Goose Lake line. That increase of use necessitates numerous line upgrades, including safety upgrades to bridges and crossings,
The current rail line is rated as “accepted status,” allowing up to five cars of biodiesel at a time. With Red Rock’s facilities expected to produce 10 rail cars of fuel each week, improvements are needed for safety with two anticipated shipments on the line from Red Rock’s facilities. One rail car of fuel is equivalent to four fuel trucks in storage capacity.
“The CRISI grant is needed for bridges and crossings that are not quite up to Class-1 accepted status,” said Lake County Commissioner Brad Winters. “Crossings and bridges must be at a certain standard for hauling biodiesel, so that’s where this money will go. The ultimate goal is to get 286,000-pound cars to cross, right now there are smaller cars, but if we get 286’s it allows Red Rock to haul more.”
Red Rock Biofuels facility will take in ag waste, excessive fire fuels from forest-thinning projects, and other bio materials easily collectible in the region, and convert it to biodiesel, jet fuel and naphtha through a gasification process known as the Fischer-tropsch process. Developed by Germany during World War II to generate synthetic fuels, the process utilizes a high-temperature and high-pressure space in an oxygen-free environment to convert bio-materials into liquid hydrocarbons. The company has signed agreements to provide fuels to FedEx, Southwest Airlines, and the U.S. military.
“We are trying to put everything in place so that if the legislature doesn’t do it we’ll still be in grant compliance with the loan,” added Winters. “There are a lot of balls in the air, but this is going to happen. This has to happen.”