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MarkWest Subsidiary to Buy Youngstown & Southern Rail
EAST LIVERPOOL, Ohio – Mule Sidetracks LLC, a subsidiary of Denver-based MarkWest Energy Partners LP, has agreed to pay the Columbiana County Part Authority $3 million for the Youngstown & Southern Railroad.
At a special meeting of the port authority Sept. 27, the board voted to accept the offer of Mule Sidetracks. The sale is scheduled to close within 35 days.
Needed is approval of the Surface Transportation Board and payment of $6,374 in back property taxes to Beaver County, Pa., for that segment of the railroad from the Ohio state line to Darlington, about two miles inside the Keystone State.
Missed communications over several years between the Beaver County assessor’s office and the port authority led to the taxes in arrears, explains Tracy Drake, CEO of the CCPA.
The payment allows the port authority to reacquire title to the parcels in Pennsylvania and sell to Mule Sidetracks.
Drake declined to comment on MarkWest’s plans for the rail subsidiary, should the transaction be consummated.
MarkWest has built extensive natural gas gathering infrastructure in Harrison, Guernsey, Belmont, Noble and Monroe counties in Ohio. By the third quarter of 2014 it is expected to operate two processing complexes in eastern Ohio with more than 900 million cubic feet per day of cryogenic gas processing capacity per day. The company’s natural gas liquids fractionation complex in Harrison County includes marketing and logistics services via truck, rail and pipeline.
“We believe the Youngstown & Southern will be part of their process for their plans to continue to expand in the state of Ohio,” Drake said. “They have spent more than $1 billion so far in Ohio. We think this will help them continue their investment in the region.”
Drake said the port authority retains the mineral rights of the 36-mile short line that runs from Youngstown to Darlington, Pa. The Youngstown & Southern Railroad Co., which leases the railroad, will continue to operate the railroad and pay the port authority a set rate depending on how much it's used. Most of its usage is to ship demolition debris to the Negley landfill operated by Tervita.
The MarkWest subsidiary agreed to lease rather than purchase about 0.2 acres that contains the Negley-Car Barn segment. That segment gave a former potential purchaser, Tervita Corp., pause from fulfilling its intent to acquire the line when it withdrew its offer a year ago.
An oil leak from an abandoned neighboring site does not require remediation of the Negley-Car Barn segment, Drake iterated. The Canfield office of Tetra Tech, based in Pasadena, Calif., said the site posed no environmental threat but Tervita refused to complete its purchase.
This spring Aqua Infrastructure LLC, a subsidiary of Aqua America, also agreed to buy the railroad, also for $3 million. That deal was expected to close by June 30. When it did not, Drake cited “operational issues.”
The port authority purchased the Y&S, which dates to 1857, in 2000 so it would not be scrapped, Drake said at the time, and would instead spur economic development in the region.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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