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<p class="small">By NATALIE DOSS Bloomberg News</p>
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NEW YORK -- CSX Corp.’s projected 40 percent gain this year in deliveries of fracking sand used for natural gas drilling may blunt a decline in coal shipments, the biggest commodity business for North American railroads.

Sand shipments matching the forecast would be the second annual gain of that magnitude for CSX, which is hauling fewer coal carloads as some utilities switch fuel sources to take advantage of a 60 percent slide in natural gas prices since early 2010.

Sand is used in hydraulic fracturing, or fracking, the technology now unlocking previously unavailable gas supplies in shale deposits such as the Marcellus formation in Northeastern Pennsylvania. Moving sand, pipe and other drilling equipment gives carriers such as CSX, the largest U.S. eastern railroad, new cargo as coal customers scale back.

Shale gas is “contributing mightily to all these stories about the end of the age of coal,” said Tony Hatch, an independent railroad analyst in New York. “The very same things that are affecting this change in coal are helping grow other things.”

Moving fracking sand into the Marcellus shale region, which stretches from New York to Tennessee, is “a great growth opportunity for us,” CSX Chief Executive Officer Michael Ward said in an interview last month. His company’s fracking-sand carloads grew over 40 percent to more than 12,000 in 2011.

While Rival Norfolk Southern doesn’t break out data for sand, the rail’s total carloads for the Marcellus Shale region rose 67 percent to 40,000 last year from 2010.

Deliveries of pipe and other drilling-related goods are increasing along with shipments of fracking sand, whose most highly prized pure-quartz variety is mined in such places as Arkansas and Texas, then used to hold open shale fractures for gas extraction. Coal still accounts for at least twice as large a portion of North American commodity carloads as any other category.

To keep abreast of changes in their mix of coal and gas-drilling cargo shipments, railroads are investing in capacity for both.

CSX purchased about 900 cube hoppers, freight cars used for fracking sand, last year, Ward said. Norfolk Southern is allocating some of its planned $346 million in 2012 spending on new freight cars for fracking sand and coal, CEO Wick Moorman said.

Gas field shipments boosting railroads