Phillips 66, Paradigm Energy team up to develop a rail terminal and pipeline in North Dakota

Phillips 66 Partners L.P. and Paradigm Energy Partners L.L.C. late last week announced they executed agreements to form two joint ventures to develop the Palermo Rail Terminal and Sacagawea Pipeline in the Bakken Shale region in North Dakota.

A rail joint venture will own the Palermo Rail Terminal to be developed on a 710-acre site in Palermo, N.D. The crude oil rail loading facility is designed with an initial capacity of 100,000 barrels per day that eventually can be expanded to 200,000 barrels per day.

Phillips 66 will construct and operate the rail terminal, which will have direct access to the Sacagawea Pipeline and serve third-party shippers on the East and West coasts via BNSF Railway Co., Phillips 66 and Paradigm Energy officials said in a joint press release.

A pipeline joint venture will retain an 88 percent ownership stake in Sacagawea Pipeline L.L.C., with the remaining 12 percent interest owned by Grey Wolf Midstream L.L.C. The joint venture will own and construct a crude oil storage terminal and central delivery point for various crude gathering systems in Keene, N.D.

The 76-mile Sacagawea Pipeline is being developed to deliver crude oil from various points in and around Johnson's Corner and a Paradigm Energy facility in McKenzie County to a number of destinations. Paradigm Energy will construct the pipeline and Phillips 66 will serve as operator.

The transactions are expected to close in the fourth quarter and total about $300 million in capital costs. Both the rail terminal and pipeline are scheduled to begin commercial operations in first-quarter 2016.