SANTA TERESA, N.M. -- Union Pacific railroad's freight volume has increased up to 300 percent in the last 12 years.

That is causing the company to target land between El Paso and Los Angeles to create a new fueling and transfer station.

New Mexico has made some land in Santa Teresa more attractive.

The Union Pacific Railroad hopes to open a rail yard near the Santa Teresa airport to become more efficient in the west.

The land is currently owned by the Bureau of Land Management or BLM, and it's working out a deal with the state.

The BLM will give up land just west of the airport. In exchange, the BLM will get land in other parts of New Mexico.

"When we pick up these lands from BLM we're giving them choice lands in Northern Dona Ana County," said Pat Lyons, NM Commissioner of public lands.

Lyons said when that happens, Union Pacific will open its rail yard on 780 acres, bringing up to 350 jobs and a $300 million investment in the economy.

There is also an incentive for the railroad. "We're putting in 4 miles of paved road to an area they want to expand. The second thing is; we're going to remove the compensating tax and fuel tax on diesel starting in July 1 of 09 or July 1 of 2010. The deal depends on what date we get completion done there," said Lyons.

New Mexico residents say the idea sounds promising.

"Our state's starting to bring in more things for the economy like we're having the whole Hollywood in Albuquerque idea and the space port. This will probably increase it even more," said Jason Tomko, of Las Cruces.

The commissioner of public lands said the state will know by the end of this year if the land deal is a go.

A letter of intent between the state, BLM and Union Pacific is expected to be signed this week.