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An expansion of Dakota Plains Holdings' Pioneer crude-by-rail terminal in Newtown, North Dakota, is expected to be completed in mid-December as the company gears up to rebound throughput volumes from low levels experienced during the summer, executives said Tuesday.

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"We've been through a couple of challenging quarters, while the spreads worked against us," CEO Craig McKenzie said Tuesday during a quarterly earnings call. "Our focus this year has been to prepare for 2014 and beyond. 2013 has been a build-out year."

The Pioneer Terminal, he said, is a flagship in the Bakken Shale.

The 30,000 b/d terminal's volumes and profit margins suffered as a result of the narrowing of the benchmark spread between Brent and West Texas Intermediate. A wide Brent/WTI spread, a key indicator of netbacks for moving crude around the US, allows for healthy profit margins for the crude-by-rail shipments.

McKenzie explained Tuesday that sending crude by rail from the Bakken becomes profitable on average when the spread is wider than $7/b. If the spread narrows to below that level, pipelines are sometimes preferred, McKenzie said.

"The Brent to WTI spread worsened early in the third quarter," McKenzie said in an earnings statement. "With our marketing operating margin reduced, we chose with our joint venture partner to limit the throughput volumes in July and August that affected both our transloading and marketing financial results for the quarter."

During Q3, oil transloading volumes of 1.7 million were down from 2.1 million barrels for the same period in 2012. Oil marketing volumes of 1.9 million barrels during Q3 were down from 2.3 million barrels for the year-ago quarter, the statement said.

Pioneer's throughput volumes are recovering, McKenzie said during the call, noting that the Brent-WTI spread is near $13/b.

"All this speaks well for our business getting back into being profitable," he said.

During the fourth quarter, the company expects throughput volumes to reach about 27,000 b/d, the highest number in three quarters, McKenzie said. After the expansion in December, the terminal's throughput could reach into the low 40,000 b/d range, he said.

The expansion will increase the terminal's capacity to 80,000 b/d, Mackenzie said in a statement released in October.

In addition, Dakota Plains is developing an inbound oilfields products business at the terminal, including a $15 million frac sand -- sand used in hydraulic fracturing -- facility scheduled for completion in May 2014.

For Q3, the company reported a net loss of $2.1 million (minus $.05/diluted share), compared with $171,658 ($0.00/diluted share) for the year ago quarter, according to the earnings statement.

Aside from low throughput volumes, the company also attributed the loss to legal and insurance deductible expenses related to the Quebec train disaster in July, according to the statement.

The Montreal, Maine & Atlantic train that derailed on July 6, killing at least 47 people in the town of Lac-Megantic, was carrying crude transloaded from the Pioneer Terminal. World Fuel Services is a partner in the facility.

--Bridget Hunsucker,
--Edited by Lisa Miller,