ND's railed oil capacity jumps over 50 percent

BISMARCK, N.D. (AP) -- North Dakota's capacity to export oil by rail has jumped more than 50 percent in June as shippers in the state increasingly turn to mile-long trains to move crude to markets not linked by pipelines.

The increase comes with a pair of crude-to-rail facilities built by Texas companies to move oil from the rich Bakken and Three Forks formations in western North Dakota's oil patch.

Justin Kringstad, director of the North Dakota Pipeline Authority, said the rail terminals bring to 17 the number of facilities built in the state since 2008, as oil drillers have tabbed trains to ship crude due to lack of pipelines or more lucrative markets not served by them.

North Dakota now has the ability to ship at least 470,000 barrels of oil daily by rail, up from about 310,000 barrels. The capacity could increase to 710,000 barrels by year's end with the addition of two other planned crude-to-rail projects, Kringstad said.

Houston-based Musket Corp. increased capacity at its crude-to-rail facility at Dore from 10,000 barrels to 60,000 barrels per day, with the first full shipment leaving the terminal in early June, company spokeswoman Kyla Turner said.

Musket built the facility in 2008 and had been sending small so-called manifest shipments of North Dakota crude. The company now is loading full unit trains which typically consist of up to 104 railcars laden with 60,000 barrels of crude.

"We have successfully loaded and returned our initial unit trains to the Gulf Coast, East Coast and Canada from Dore with turn times of 10 to 17 days," Turner said.

"We have the capacity to go to any major market," she said. "With this expansion, we can go anywhere."

Rangeland Energy LLC, which is based in Sugar Land, Texas, began shipping crude-laden trains from its facility near Epping earlier this month.

The facility, which includes five 120,000-barrel storage tanks and a sixth near Tioga, had been under construction for about a year, said Casey Nikoloric, a company spokeswoman.

The terminal has the capacity to ship in excess of 120,000 barrels daily by rail, Nikoloric said.

Destinations for the rail shipments are "driven by clients," she said.

"It can go to the Gulf Coast, and all points east and west," Nikoloric said. "It could go anywhere."

Neither Musket nor Rangeland Energy would disclose the cost of their projects. BNSF Railway Co. is transporting the crude from both facilities, the companies said.

BNSF hauls about 75 percent of the crude that leaves North Dakota by rail, said Kringstad, the director of the state Pipeline Authority.

North Dakota, the nation's No.2 oil producer behind Texas, produced a record 18.2 million barrels of crude in April, up 10.5 million barrels from the same month a year ago, state records show.

Rail shipments account for about one-quarter of the North Dakota's daily oil production, Kringstad said.

State officials believe North Dakota's oil production could double in the next three years to more than 1 million barrels and billions of dollars in projects are planned in the state to keep pace with production.

Kringstad said while six major pipeline projects are proposed to move North Dakota crude, railroads have taken a formidable foothold in the state.

"Pipelines will be competing with rail for customers and shippers," he said.