Construction of a third 90,000-bbl storage tank is set to commence immediately, and regulatory permits and engineering design are complete.

Dakota Plains expects the storage tank to be operational by summer 2015.

The Pioneer Terminal is located in the heart of the Bakken and Three Forks formations and currently has sustainable throughput capacity of 45,000 b/d, with onsite oil storage of 180,000 bbl.

The addition of a third storage tank, recently announced Hiland Partners gathering pipeline and anticipated expanded rail service will facilitate increasing the sustainable throughput rate to a unit train per day – equivalent to 80,000 b/d.

Gabe Claypool, COO of Dakota Plains, who will oversee the project, said that construction of the new storage tank will commence immediately but will be suspended during the winter months and resumed in the spring.

Construction of the new storage tank is estimated to cost $5.5 million gross or $2.75 million net to Dakota Plains for its 50% share.

The project is expected to be funded through cash from operations and debt.

Craig McKenzie, CEO of Dakota Plains, said that the company’s goal is ultimately to expand the Pioneer Terminal capacity beyond 80,000 b/d commensurate with oil developments near the Pioneer Terminal, complemented by the Hiland Partners pipeline that will be able to gather oil from across the basin.

In May, Dakota Plains said that its Pioneer Rail Terminal throughput in North Dakota averaged over 31,000 b/d of crude oil for the first quarter, up from the 2013 average of 24,000 b/d.

The company had said on Feb. 11 that the February crude throughput was expected to average 38,600 b/d.

Dakota Plains Holdings Inc. is an integrated midstream energy company, which competes through its 50/50 joint ventures to provide customers with crude oil off-take services that include marketing, transloading and trucking of crude oil and related products.