Cenovus to buy Alberta oil train terminal from Canexus for C$75 million
By Nia Williams
CALGARY, Alberta (Reuters) - Cenovus Energy Inc (CVE.TO: Quote), Canada's No. 2 independent oil producer, has agreed to buy the Bruderheim, Alberta, crude-by-rail terminal from Canexus Corp CUS.TO for C$75 million in cash, the two companies said on Thursday.
The 70,000 barrel-per-day Bruderheim facility was western Canada's first unit train terminal, capable of loading more than 100 tank cars of crude in one go at a cheaper rate than mixed cargo manifest trains.
It is connected by pipeline to projects in Alberta's vast oil sands, the world's third largest crude reserves, and was seen as a front-runner in what many industry observers forecast would be a Canadian crude-by-rail boom.
But the terminal, 50 kilometers (30 miles) northwest of Edmonton, has struggled to reach full capacity since it opened in late 2013. It was put up for sale last August after construction costs spiraled to C$356 million.
Canexus, a Calgary-based chemicals and handling company, which also owns sodium chlorate and chlor-alkali plants in Canada and Brazil, said it will use the sale proceeds to pay down bank debt.
"By returning to our roots as a pure chemical producer, we are returning to what we do best," Canexus Chief Executive Doug Wonnacott said.
Cenovus is already a committed shipper at the Bruderheim terminal and will buy the unit and manifest train operations, pipeline connections to the facility and some above and below ground storage.
The oil sands producer said the acquisition would help maximize market access, capture global prices for its oil and give access to niche markets not served by pipeline. Continued...