Port Arthur, TX, is slated to be the site of a new multi-user rail terminal to handle delivery of Bakken Shale crude oil to the Gulf Coast for distribution to pipeline or refining consumers in Texas.

Savage Companies and Kansas City Southern (KCS) have made a joint development agreement for the project. Savage intends to construct, own and operate the terminal on property owned by The Kansas City Southern Railway Co. The terminal, to be known as the Port Arthur Crude Terminal (PACT), will be served by KCS.

“We believe the Port Arthur refinery complex and the readily accessible storage and distribution infrastructure in the area make this site an attractive destination for North American crude production,” said KCS CEO David L. Starling.

North Dakota oil production accounted for less than 1% of U.S. crude oil production three years ago, but today the state is providing nearly 6% of crude output, thanks to the Bakken-Three Forks shale region, the state’s Department of Mineral Resources said recently. More than 2,000 new wells are slated to be drilled in 2011, which is double the number drilled last year (see Shale Daily, Jan. 5).

The terminal property is adjacent to KCS’ multi-million-ton capacity Pabtex coal and coke export terminal, which is operated by Savage. The terminal is to feature an extensive rail complex for unit trains and crude oil tank storage, the partners said. Savage has begun first-level engineering, design and permitting studies and anticipates that construction will begin later this year, with completion expected by the second quarter of 2012.

Savage expects to immediately begin discussions with potential customers for services at the terminal. Plans call for Savage and KCS to work with other railroads in securing joint unit train service design. Savage and KCS are also exploring the potential of receiving other products at PACT, including certain refined products, in concert with KCS’ Mexican gateway.

Savage owns and/or operates terminals for coal, petroleum coke, sulfur, chemicals and other commodities. KCS is a transportation holding company that has railroad investments in the U.S., Mexico and Panama. Its primary U.S. holding is The Kansas City Southern Railway, serving the central and south-central U.S.