Crude-By-Rail Out Of The Bakken

Great story on crude-by-rail in the Minneapolis Star-Tribune.

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.

Claypool, 37, who grew up on a farm in Hampton, Iowa, was living in Minnesota in 2011 when investors in Wayzata and Minneapolis approached him to run their start-up crude-oil-to-rail business. At the time, he was a manager at a networking company and had spent nearly a decade at AT&T.

He was puzzled initially that anyone would ask him -- a farm kid working in the technology industry -- to run an oil business, he said. Then someone explained that the business model "is remarkably similar to a farmers' elevator," he said.

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.

Go to the link for the full story, and many, many data points regarding the crude-by-rail story. It's quite phenomenal.