Gibson, logistics firm to build 140,000-bpd oil sands rail terminal
CALGARY, Alberta Aug 6 (Reuters) - Canadian midstream company Gibson Energy Inc and logistics provider U.S. Development Group (USDG) said on Tuesday they will build a 140,000-barrel-per-day terminal in Hardisty, Alberta, to ship oil sands crude by rail.
The project would be the largest terminal for western Canada, where demand to move crude by rail has been gathering pace as producers look for ways to ease congested export pipelines.
It also underlines how the runaway fuel-train accident that killed 47 people in the town of Lac-Megantic, Quebec, last month appeared unlikely to halt Canada's crude-by-rail boom.
The terminal, due to be operational by the first quarter of 2014, would be able to handle two unit trains of up to 120 railcars per day and load multiple grades of crude oil for transport to refining markets across North America.
Hardisty is one of the two main storage hubs for the Canadian oil sands and the starting point for export pipelines to the U.S. Midwest.
"The Hardisty Rail Terminal will give Canadian oil producers flexibility to obtain the best value for their product and (give) refiners expanded access to price advantaged crude oil supplies," said Mike Day, USDG's vice president.
Lack of space on pipelines led to crude bottlenecks and deep discounts on heavy Canadian crude, compared to the West Texas Intermediate benchmark earlier this year as producers struggled to get access to markets in the United States.
Term contracts have already been signed with four customers for approximately 100,000 bpd and Rick Wise, Gibson's senior vice president of operations, said discussions were underway with several customers about further shipping commitments.
The rail terminal would be served by Canadian Pacific Railway Ltd, and all crude loaded there would be pumped from Gibson's 4-million-barrel Hardisty crude terminal, located 5 kilometres away.
"The Hardisty Rail Terminal will be a significant rail hub and is located on CP's high-capacity north main line with efficient access to the refining markets across North America," said Tracy Robinson, CP vice president of energy and merchandise.
© Thomson Reuters 2016 All rights reserved.