With all of the hydraulic fracturing activity taking place across North America, there were always likely to be some logistical issues. The U.S. is one of the few locations in the world where the infrastructure can largely support the booming shale industry, yet the industry’s fracking renaissance has caused it some growing pains as well. That’s where enterprising companies like Rangeland Energy come in.

At the May 27 DUG Permian Basin midstream discussion, “Rolling in pipe and proppant and rolling out the crude,” Chris Keene, president and CEO of Rangeland, talked about his company’s adventures in North Dakota, which led to its flagship COLT Hub and COLT Connector projects. The COLT system is the largest open-access crude marketing hub in North Dakota, according to Keene, and has been a source of pride for this self-confessed “pipeliner” ever since.

“When we set about organizing North Dakota to build a business, we thought we’d be gathering pipeline, maybe adding truck stations here and there; but we very quickly realized that wasn’t what the area needed,” Keene said. “What the area needed was what I call a market hub, or a point of liquidity. Think of it as a mini-Cushing, Oklahoma, planted in the middle of North Dakota. A facility where you could have multiple inbounds of crude oil, gathering pipe as well as truck. We have the infrastructure at the hub to stage it, to store, to provide other internal service whether that’s blending or whatnot, and then have multiple outbounds to multiple markets to maximize the value of the commodity, both via pipeline and via rail. That’s what we built in North Dakota and it was a great success. The facility continues to grow today.”

In late 2012, Rangeland sold the COLT system to Inergy Midstream, now known as Crestwood. Today, Rangeland hopes to repeat its successful venture that started in the Bakken, this time bringing the hub to the ever-expanding Permian Basin.

“We pulled back to the 50,000-foot view and looked at several areas—looking for areas preferably with rapidly increasing production and a lack of infrastructure, or an area extremely limited by the available infrastructure to service those needs,” Keene said. “We identified two areas of focus; one was Western Canada and the second was the Permian Basin, in particular the western side of the Permian known as the Delaware Basin. We explored both of those options and very quickly zeroed on a project that we’re developing, and it’s actually in construction now in the Delaware Basin just north of Loving, New Mexico.”

Several other factors went into the Delaware Basin selection, Keene said. It was critical for there to be enough land to expand the hub in scale, he said. More importantly, he said Rangeland wanted to set up a hub “right in the heart” of where production would be in five to 10 years.

“So you look at where the heart of that production lay [in this case, the Delaware Basin] and on top of that, you look at where you have access to rail, where you have access to paved roads, and then preferably where you have close proximity to pipeline infrastructure—or at least proximity enough to where you can develop that infrastructure for your customers,” he said.

Meeting all of those criteria was not easy, he added. But once the property was found, Rangeland began work on its RIO project. RIO is short for Rangeland Integrated Oil system. It comprises a system of terminals and pipe designed to collect crude oil and condensate production from the Delaware Basin and ship it to downstream markets in the U.S. via rail and pipeline, according to Keene.

“The key to this hub is connectivity,” he said. “We’ve secured 300 acres with great road and rail access and the land to develop the scale we need. That’s critical. We have to have the ability to grow it large.”

Expanding the hub will come with time, Keene said, as production increases and the demand for additional space to store crude oil, tanks and sand grows with it.

“The demand right now is sand,” he said. “I tell investors that everything we’re doing here on the midstream side is driven by one thing: that’s shale production. And there are three things (at the risk of oversimplifying this) that you need for that: drilling technologies, sand and water.”

The only way to get sand to market from the supplier is via rail, Keene said.

“It doesn’t matter what crude-price differentials are—none of that matters,” he said. “It has to get in by rail and distributed out by trucks. There is a huge need for that. The demand is growing, doubling, over the next 10 years, possibly more than doubling. That’s driven not only by more rigs or wells, but it’s also because producers are getting more efficient. They are getting more wells per rig out of their equipment, and we’re also seeing longer laterals and more frack stages—all of that attributes to demand.”

Construction of the RIO system began in mid-May. When it is complete it will be equipped to accommodate more than 1 million tons of frack sand per year, according to Rangeland’s website. The RIO Pipeline is expected to connect the RIO Hub in Loving to market centers in Midland, Texas, and beyond.