Wayzata firm to expand N.D. rail terminal for Bakken crude oil

To keep up with booming shipments of crude oil by railroad, Wayzata-based Dakota Plains Holdings Inc. said Friday it has begun a $50 million expansion of its crude oil loading facility in New Town, N.D., to rapidly load trains of up to 120 tank cars.

The project, undertaken with joint-venture partner Petroleum Transport Solutions, will add looped tracks for easier loading, boosting daily throughput capacity from 30,000 barrels to 80,000 barrels.

Dakota Plains President Gabe Claypool said the Pioneer Project also adds more storage, giving the company more flexibility with truck deliveries. It also will open the door for crude oil deliveries from future short-range pipelines, Claypool said.

Dakota Plains estimates the project will be complete by December.

North Dakota, now the second-largest oil-producing state behind Texas, has a shortage of pipelines to carry crude to market. Justin Kringstad, director of the North Dakota Pipeline Authority, said 68 percent of the crude oil production in the state was transported by rail in January.

"We've got oil moving to the East Coast, to the West Coast, and all the way down to the Gulf Coast," Kringstad said. "So we're covering all corners of the U.S., and the rail transportation has allowed us to do that."

Dakota Plains' terminal is linked to the Canadian Pacific Railway, whose tracks also run through the Twin Cities. The company has seen crude-by-rail traffic soar to 53,000 tank car loads last year, compared with 500 in 2009.

"Through Canadian Pacific's network and rail connections, our railroad offers rail-direct service from the Bakken to key refining markets anywhere in North America," said Canadian Pacific spokesman Ed Greenberg. "The Pioneer Project expansion clearly demonstrates the unique advantage rail offers in moving oil. Furthermore, rail is scalable, which allows our customers flexibility to scale our operations consistent to what a customer needs."

The New Town facility is in its fourth year of operations, and also includes trucking and marketing of crude oil. Its venture partner is a unit of World Fuel Services Corp., a publicly traded global petroleum marketing and services company based in Miami.

On Thursday, Dakota Plains reported lower fourth-quarter earnings, $1.8 million compared with $3 million a year ago. It attributed the decline to expenses tied to engaging a new contractor to manage the New Town terminal.

Its stock closed Friday at $3.80, unchanged for the day.

Justin Miller is a University of Minnesota journalism student on assignment for the Star Tribune.