Dakota Plains Gets Boost from Bakken Shale Boom in Third-Quarter 2014, Shows Promise in Frac Sand Business

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Researched by Industrial Info Resources (Sugar Land, Texas)--Dakota Plains Holdings Incorporated (Wayzata, Minnesota), an integrated midstream energy company, reported solid overall gains in third-quarter 2014, following a jump in income from transloading joint ventures and a new revenue stream from the fractionation sand industry. Much of the gains were attributed to rapid growth in the Bakken Shale. Net income was reported to be $1.53 million (all but $13,414 of which was attributable to non-controlling interests), compared with a net loss of $2.06 million in third-quarter 2013.

Industrial Info is tracking two major projects in New Town, North Dakota, that are owned by Dakota Plains: the $80 million construction of a crude oil pipeline, and the $5.5 million addition of a 90,000-barrel-per-day (BBL/d) crude oil storage tank at the company's Pioneer crude-by-rail transloading terminal. The planned 70-mile, 12-inch-diameter pipeline will transport 120,000 BBL/d Bakken crude oil, via the terminal, from McKenzie County, North Dakota, to Enbridge Incorporated's (NYSE:ENB) (Calgary, Alberta) Stanley Terminal in Minot, North Dakota.

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Dakota Plains executives expect the storage tank to be operational by the summer of 2015.

Earlier this year, Dakota Plains and Hiland Crude LLC, a wholly owned subsidiary of Hiland Partners LP (Enid, Oklahoma), announced an interconnection agreement that will link the Pioneer terminal to Hiland's Market Center Gathering System crude oil pipeline network, which is the largest gathering system in the Bakken Shale. Construction is under way. According to the announcement, the connection to the Pioneer terminal is expected to have an initial capacity of more than than 15,000 BBL/d, which can be expanded to supply approximately 60,000 BBL/d.

Total revenues stood at $6.94 million, compared with only $76,758 in the same period last year, when the company's only reported revenues were from rentals. The company's outbound volumes during the third quarter showed strength, with transloaded volumes more than doubling. Operating costs were lower, following the renegotiations of key service contracts.

"We are pleased with the continued operational and financial performance of the Pioneer Terminal. "Outbound volumes remained strong despite, temporary rail service issues," said Craig M. McKenzie, the chairman and chief executive officer of Dakota Plains, in a quarterly press release. "Our marketing joint venture has returned to profitability despite narrow price spreads, and we are continuing to work with our joint venture partner to address ongoing issues related to this business."

Executives expect to see higher throughput volumes at the company's fractionation sand terminal, which started up in June. Dakota Plains and UNIMIN Corporation built the 750,000-ton-per-year facility, which connects UNIMIN's largest frac sand mine in Tunnel City, Wisconsin, with exploration and production activity in the Bakken Shale.

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