CALGARY, Alberta (Reuters) - Keyera Corp and Kinder Morgan Energy Partners LP announced on Tuesday a $98 million joint venture to build a crude oil rail-loading terminal in Edmonton, Alberta, one of the main storage hubs for Canada's oil sands.
The project is the latest development to cater to the growing demand among Canadian producers, frustrated by apportionment on congested pipelines, to use railways to export crude south to U.S. markets.
"The Alberta Crude Terminal is a great strategic fit with our expanding Edmonton terminal hub and is a very important part of our growing crude by rail terminal network," said Bill Henderson, vice president for Kinder Morgan Canada Terminals.
Midstream operator Keyera said the 50-50 joint venture rail-loading facility will be able to load about 40,000 barrels per day of crude oil and deliver to refineries anywhere in North America.
The companies are targeting the second quarter of 2014 for the commissioning of the new terminal, which could be expanded by an extra 125,000 bpd of crude loading capacity depending on customer support.
"Kinder Morgan's access to multiple crude streams, together with our location and facility capabilities, combines crude oil supply with the necessary infrastructure, land and rail connectivity to help address some of the crude oil delivery con straints currently being experienced by the Alberta energy sector," Keyera President and Chief Operating Officer David Smith said.
Both companies are planning modifications to their existing Edmonton facilities, including building new pipelines between terminals, to help deliver crude to the new Alberta Crude Terminal.
Keyera's share of the cost of the Alberta crude terminal is expected to be about $65 million, while pipeline company Kinder Morgan is expected to spend $33 million.
The construction of the terminal, which will be served by both Canadian Pacific Railway and Canadian National Railway, is underpinned by a five-year agreement with a major refiner, Keyera said.
Reporting by Nia Williams; Editing by Eric Beech, Bernard Orr