Trackwork in Illinois, Iowa part of UP's 'replacement capital' budget

Union Pacific Railroad plans to spend $17 million to upgrade a line between Manlius and Edelstein, Ill.

To be completed by August's end, the project calls for installing about 34 miles of new rail, replacing two switches and renewing surfaces at 37 grade crossings.

UP also plans to spend $10 million to improve a line between Boone and Denison, Iowa. Scheduled for completion by early September, the work involves replacing 46,500 concrete ties.

The projects are two of nearly 1,500 the Class I plans to complete across its 32,000-mile network this year as part of a $3.6 billion capital spending program.

About $2 billion of the capex budget is replacement capital, most of which is committed to renewing track infrastructure, said UP Executive Vice President of Operations Lance Fritz during the Class I's earnings conference held July 18. Spending for service, growth and productivity initiatives — mostly capacity projects, commercial facilities and equipment — will total around $1 billion and spending on positive train control will total $450 million for the year, he said while reviewing progress on the railroad's capital projects.

"We're on target for the year as more than half of [our] program work is now complete," said Fritz. "Major projects include work on the Santa Teresa, New Mexico, rail facility, which is slated to open in early 2014."

In the South, the railroad's capacity expansion plans will cost three times the spending levels in 2011 to support growing volumes in the region, he said.

"We're adding sidings, expanding terminals, double-tracking some routes and upgrading signals," he said. "We're also purchasing 100 locomotives, 900 freight cars and some domestic containers to replace units currently on lease or being retired."