WELLSBORO — The need to transport millions of pounds of sand and other materials to the rapidly increasing number of Marcellus Shale natural gas well drilling sites in Pennsylvania is bringing big business to railroads.

The new business is arriving as Pennsylvania's railroad operators — the state has the most in the nation — were suffering shrinking demand for loads of traditional materials, such as coal.

A system of six railroads in northcentral Pennsylvania, including the Lycoming Valley Railroad, is enjoying a 40 percent increase in business over last year's first quarter, said chairman and CEO Richard Robey.

"We have seen a substantial increase in business related to the Marcellus Shale gas well drilling," Robey said Wednesday.

Before that, the recession had sliced the railroads' business by nearly 20 percent, as it hauled fewer loads of iron and steel products and scrap, food stuffs and plastics to manufacturers, he said.

Sand distribution facilities as well as suppliers of pipe and other equipment are setting up shop close to the rail routes, he said. The sand is blasted with water and chemicals into a well bore to fracture the shale and free the gas trapped inside.

To help handle the additional freight, the system has added a couple employees and expects to add two or three more, Robey said.

The activity is the result of exploration companies from around the country flocking to Pennsylvania since 2008 to drill into the gas-rich Marcellus Shale.

Drilling activity is already transforming some parts of Pennsylvania.

In recent months, Reading & Northern Railroad spent $100,000 to transform an outdated and barely used terminal near Wilkes-Barre originally built in 1870 as a hub to haul coal to large eastern cities.

Now Pittston Yard is almost always busy, with new track to accommodate more rail cars and a facility to handle sand shipments, according to the company.

Reading & Northern President Warren Michel said he expects another $500,000 to be spent by his company and others on track improvements and material-handling facilities and equipment to transport drilling necessities, such as sand, water and pipe.

In northern Pennsylvania, the Wellsboro & Corning Railroad bought four used locomotives after cargo traffic nearly tripled in the past two years.

Owner Tom Myles, a fourth-generation railroader from Chester County, hired 10 people to transfer sand from rail cars into trucks and said he expects business to nearly double this year for the 35-mile short line railroad in Tioga County.

Originally, Myles bought the railroad a couple years ago because he saw the potential to move lumber being cut in northern Pennsylvania's forests.

"I didn't even know about the sand when I came in here," he said.