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Large Oil Transfer Site Proposed for North Dakota

Plans for a major Bakken crude oil transfer facility in North Dakota were unveiled Tuesday as a privately bankrolled venture in conjunction with Canadian Pacific Railway (CP). Construction is expected to begin later this year, and initial storage and loading service are expected to start in the second half of 2015.

Slated for 350 acres in Mountrail County, the combination rail-pipeline project is a joint venture of Dakota Gold Transfer-Plaza LLC and a unit of Riverstone Holdings LLC, the global energy project private equity investment firm. It will be located at a private rail spur under a long-term lease held by Dakota Gold.

Billed as state-of-the-art, the oil transfer hub will be served by CP with 70,000 b/d throughput capacity, more than 300,000 bbl of storage in its first phase and a planned expansion up to 600,000 bbl in a second phase buildout. The throughput capacity equates to one unit train/day, which would be an average size crude rail facility for the state, according to Justin Kringstad, director of the North Dakota Pipeline Authority.

Project sponsors are not releasing the projected cost of the facilities, which will be built with the capability for substantial future expansions of storage and transload capacity as customer demand increases, a Dakota Gold spokesperson said.

"Dakota Gold is currently working with various midstream companies to develop gathering connections to the proposed Plaza Terminal," the spokesperson said. "[It] also is in discussions with various pipeline companies to develop outbound pipeline service from the [terminal] to multiple pipeline markets."

The objective is to provide what Dakota Gold called "significant takeaway capacity" to the premium crude oil markets, and it intends to do that by creating a logistics hub at the new location in the eastern section of the Bakken/Three Forks shale oil producing area, the spokesperson said.

Terminal design will include two loop tracks with storage for one or two additional trains on the private rail spur, a covered loading barn, a 14-arm system capable of loading a unit train in about 14 hours, 15 truck unloading bays, and three 103,000 bbl storage tanks.

Kringstad told NGI's Shale Daily he was not aware of the Dakota Gold project to be done with Riverstone's TrailStone Group. North Dakota has upward of 20 existing crude rail facilities in operation with several others on the drawing board. "I'll have to reach out to [the developers] to see if I can learn a little bit more about the project," he said. "I am just learning about it today [for the first time] along with you."

Kringstad said he was not familiar with Dakota Gold or its CEO, Cody Moe. The company bills itself as a well-established crude oil trucking and construction firm with seven years of experience in the Bakken. The Transfer-Plaza LLC company was formed earlier this year specifically to develop the new marketing hub and its partner, TrailStone, was formed last year as a global commodities logistics and physical trading company funded by Riverstone.

The project backers lauded CP for its substantial capital investment in the Bakken region and in the New Town sub-rail line, which will be key for the proposed facility. CP's Tommy Browning, vice president for energy and merchandise marketing/sales, said the rail company's 15,000 track miles and global reach can help the proposed hub provide "flexibility to marketers and refiners."

CP plays a role in crude shipments to eastern and western markets. It is the sole rail carrier providing single line haul rail service between the Bakken and major crude oil markets in the northeastern United States.

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