$50M rail facility expansion for New Town

NEW TOWN A rail transload facility for crude oil at New Town is expanding.

Dakota Plains Holdings Inc. and joint-venture partner Petroleum Transport Solutions LLC jointly announced Friday that their $50 million Pioneer Project is a substantial expansion of the New Town facility. Dakota Plains has its headquarters in Wayzata, Minn., and Petroleum Transport Solutions’ headquarters are in Eden Prairie, Minn.

Crude oil supplying the facility is currently sourced primarily from the Bakken Formation that underlies parts of Montana, North Dakota and Saskatchewan.

The New Town facility is served by Canadian Pacific Railway.

The construction of the Pioneer Project, just south of New Town in OsbornTownship, Mountrail County, will provide a double loop track to accommodate up to 120-car unit trains and increase the crude oil capacity from 30,000 barrels per day up to 80,000 barrels per day, according to a news release.

The partnership will deploy 180,000 barrels of storage to start, with the expansion to 270,000 barrels built into the initial design.

The addition of storage tanks will improve the reliability and efficiency of the crude reception by truck and opens the door for crude oil deliveries from gathering systems, or short range pipelines.

Construction of the Pioneer Project will begin when weather permits, said Gabe Claypool, president and chief operating officer for Dakota Plains Holdings in Wayzata. He said the project is expected to be completed in December.

“2013 is proving to be another rewarding year for Dakota Plains shareholders as we set out to highly increase the scale of our operations,” said Craig McKenzie, Dakota Plains chairman and CEO, in a prepared statement.

Carlos Cuervo, World Fuels Services senior vice president, said the project will further expand Bakken crude oil marketing capabilities.

“We are excited to be playing a major role in expediting this project,” he said.

The crude oil will be transported on Canadian Pacific’s rail network, continuing a partnership between CP and Dakota Plains Holdings and World Fuel Services.

“We look forward to leveraging this expansion and our network to increase the volume of crude moving efficiently into the marketplace and to provide a cost effective way for inbound commodities to reach Bakken production areas,” said Jane O’Hagan, Canadian Pacific executive vice president and chief marketing officer in Calgary, Alberta, in a prepared statement.

The project is being funded equally by Dakota Plains and World Fuel Services. The existing ladder tracks and Dakota Plains-owned land will be used for inbound delivery, storage and trucking logistics services for commodities such as sand, chemicals, diesel and pipe. Debt financing will be provided for the Dakota Plains portion of the Pioneer project cost.

Currently, the New Town facility is in its fourth year of midstream operations with three business segments comprising trucking, transloading, and marketing of crude oil and related products originating in the Williston Basin in North Dakota. Land ownership at the New Town facility now exceeds 192 acres, which provides a base for the Pioneer Project expansion.