Amy Dalrymple, Forum News Service, Published August 03 2012
Elevator poised to double revenue by partnering with oil industry
Today, as a result of two partnerships with the oil industry, the elevator is poised to nearly double its revenue and add up to 40 new workers.
The most significant collaboration is an Enbridge Pipelines expansion that includes a railcar loading facility that will be operated by elevator employees.
“It’s going to be a big deal for us,” said Dan DeRouchey, who manages elevators in the towns of Berthold and Carpio, which are about 25 miles northwest of Minot.
DeRouchey began looking for “sidelines” for the grain elevator last spring when wet weather prevented farmers from getting crops in the ground.
The first venture was to partner with oilfield service company Schlumberger to take sand from railcars and load it onto trucks that haul it to the Oil Patch for hydraulic fracturing.
The elevator charges $400 per car for track space and a third party unloads the sand. DeRouchey estimates the elevator sees 150 railcars of sand or ceramic material used for fracking per month.
“They just needed a spot to unload the cars,” DeRouchey said.
Then DeRouchey, who was familiar with Enbridge’s existing pipeline and other infrastructure in Berthold, approached Enbridge about working together.
Construction is under way on a major expansion that will add 80,000 barrels per day of takeaway capacity by rail early next year.
Starting in September, Enbridge will load about 100,000 barrels per week, or one unit train a week, from truck to railcars, said Matt Faith, a manager with Enbridge.
The railcar loading facility is expected to be complete in January.
“The demand is insatiable,” Faith said.
Adding the crude loading operation will nearly double the elevator’s net revenue and add high-paying jobs, DeRouchey said. Farmers will benefit from the partnership through dividends and through upgraded elevator facilities, he said.
“They’re going to share in that profit,” DeRouchey said.
The frack sand loading operation is primarily during the off-season so it doesn’t conflict with harvest, DeRouchey said.
“Our mission is to take care of the farmer,” he said.
Berthold Mayor Alan Lee said the city is adding about 350 acres of property used by Enbridge to expand the city’s property tax base. That extra income will help the city make street and sewer improvements and help the city establish its first police force.
“We can pay for this without going to the local taxpayer,” Lee said.
The Berthold Farmers Elevator will continue to look for other ways to partner with the oil industry.
“It was just driven by a need to find a source of income,” DeRouchey said.
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Dalrymple is a Forum Communications Co. reporter stationed in the Oil Patch. She can be reached at firstname.lastname@example.org or (701) 580-6890.