Dakota Plains Holdings Inc., a Wayzata firm that has been sued over the July 6 oil train explosion that killed 47 people in Quebec, said Thursday that the allegations against it are baseless.
Dakota Plains has an ownership stake in the New Town, N.D., railcar oil loading facility that was the point of origin for the train that caused the Lac-Mégantic, Quebec, disaster, which occurred after runaway tank cars derailed and exploded. Loaded in New Town, the train was transporting oil from North Dakota’s Williston Basin oil fields to a refinery in eastern Canada.
“We believe lawsuit allegations are without merit, and we maintain sufficient insurance to protect the company,” Dakota Plains CEO Craig McKenzie said Thursday during a conference call with analysts to discuss the company’s quarterly results.
Dakota Plains missed Wall Street’s expectations for the second quarter with a loss of $593,802, or 1 cent per share. Analysts had expected a profit of 1 cent per share.
McKenzie told analysts that the company has an arm’s-length relationship with the oil loading facility. It owns the land, and its joint venture partner, World Fuel Services, runs the facility and owns the oil being loaded into the railcars.
“We never owned the oil,” McKenzie said in response to an analyst’s question. World Fuel Services “operates New Town, they lease the rail cars and sublease the rail cars to our joint venture. World Fuel is titleholder of the crude oil supply and trades on behalf of the joint venture with Dakota Plains. That’s different than saying we had a role. We have a financial interest.”
But in its second-quarter earnings release, Dakota Plains stressed its facilities ownership. It said that, through its 50 percent-owned joint ventures, its “direct and indirect assets” include the New Town railcar and truck loading facility, more than 1,000 railroad tank cars and a trucking fleet.
In addition to raising questions about who is to blame for the crash in Lac-Mégantic, the disaster prompted a debate over whether it is safer to move North American oil by train or pipeline.
In a separate development, the train operator in the disaster, the Montreal, Maine & Atlantic Railway Ltd. and its Canadian counterpart, Montreal, Maine & Atlantic Canada Co., this week filed for bankruptcy protection in the United States and Canada, citing debts to more than 200 creditors after the disaster in Lac-Mégantic. On Thursday, a Canadian judge granted the railroad protection from creditors.
The railroad said previously that the train was parked outside Lac-Mégantic for the night with no crew members on board. Its locomotive had been shut down, “which may have resulted in the release of air brakes on the locomotive that was holding the train in place,” the railroad said in a statement.
Dakota Plains shares fell 20 cents to $2 on Thursday.