In November, 57% of North Dakota’s oil was shipped by rail

Two years ago, Gabe Claypool had nothing to do with oil and railroads. Today, he is CEO of a Wayzata-based company that ships 3.5 percent of North Dakota’s oil to East Coast and other refineries in railroad tank cars.

The company, Dakota Plains Holdings, is part of a revival of the old way of shipping crude oil — via rail — that last flourished during World War II. And it’s another case of North Dakota’s oil boom igniting spinoff businesses.

“If the capacity to move oil isn’t there by pipeline, the only alternative is to get it out by rail — or you stop producing oil until the pipelines catch up,” Claypool said in an interview.

Dakota Plains in 2010 opened a crude-oil-to-rail loading terminal in New Town, N.D., in the Bakken oil region. The company was among the first to see that pipeline capacity would be insufficient to ship all of the region’s oil.

Crude oil is brought to Dakota Plains’ rail terminal by truck, then put on trains of up to 120 tank cars stretching more than a mile. Dakota Plains was the first crude-to-rail terminal on Canadian Pacific’s North Dakota system, and it already has been expanded, with more growth planned.

Claypool said the company’s 1,100 leased tank cars have carried crude to Albany, N.Y.; Philadelphia; St. John, New Brunswick; Galveston, Texas, and Walnut Hill, Fla.

Today, 20 crude-to-rail terminals have sprouted along the North Dakota tracks of Burlington Northern Santa Fe and Canadian Pacific. In November, the railroads hauled 57 percent of the region’s crude.

Railroads also are making money shipping equipment, pipe and sand to the oil fields. The sand, which is mined in Wisconsin and Minnesota, is used in hydraulic fracturing, one of the technologies driving North Dakota’s oil boom.

Star Tribune

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