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Union Pacific Railroad recently reached an agreement with the state of New Mexico to build a $150 million intermodal terminal in Strauss, N.M., by 2015 in exchange for the elimination of a locomotive fuel tax and state-funded road improvements.

Designed to handle 100,000 containers annually, the 934-acre facility will feature a mainline locomotive fueling station, train inspection area and rail yard. UP expects to begin construction in 2008 and complete the terminal in 2010, pending land acquisition.

The railroad proposes to transfer fueling, inspection and crew change functions from an El Paso, Texas, terminal to the Strauss facility. However, UP will not close the El Paso ramp, the railroad said.

New Mexico will eliminate a compensating locomotive fuel tax by July 1, 2009, and provide $5 million to improve a county road connecting a nearby highway and the terminal.

“[The] agreement is a testament of how a public/private partnership has the ability to find solutions to benefit both parties,” said UP President and Chief Executive Officer Jim Young in a prepared statement. “The facility will enable us to improve efficiency and expand our operations in the southern New Mexico/western Texas region.”