Rail projects steam ahead in Alberta

Canadian independent Canexus is adding its weight to those who are pressing on with moving crude by rail despite the Quebec rail tragedy as they work on alternatives to delays in providing pipelines for Alberta oil sands producers.

It has signed a 10-year deal with Inter Pipeline Fund to move 100,000 barrels per day of bitumen blend on a new pipeline lateral from the Cold Lake pipeline system in northeastern Alberta to a terminal at Bruderheim near Edmonton for loading unit trains. The in-service date is set for mid-2014.

Canexus said the contract will generate about C$10 million per year.

That follows separate deals over the past nine months with oil sands producers Cenovus Energy and MEG Energy.

The latest deal with North American Terminal Operators will include spending of C$125 million to construct pipeline connections, rail infrastructure, loading and offloading facilities and storage tanks to allow for the movement of unit trains with 118 tanker cars, said Canexus Chief Executive Officer Gary Kubera.

He said Canexus expects to increase its handling capacity to 25,000 bpd by the end of this year from 8,000 bpd last year, with the first unit train entering service later this year.

Neil Shelly, executive director of the Alberta Industrial Heartland Association, said the Quebec disaster “will cause people to take a second look at shipments by rail. But there is growing pressure on the industry to get more bitumen to market.

“With delays in Keystone XL and Northern Gateway pipelines, this pressure continues to grow and create conditions where alternative forms of transportation become a necessity,” he said.

Shelly said that even modest projections point to the need for an extra 300,000 bpd of diluents for blending with raw bitumen to move production.

“Given the lack of existing systems in place, we see some existing and new players, like Canexus, stepping up to the plate,” he said.

Canexus has signed other deals with MEG for delivery of bitumen blend to the Bruderheim terminal top service unit trains of up to 118 tanker cars with capacity of about 70,000 barrels and with Cenovus for bitumen blend receiving and unit train loading services at the terminal.

For MEG the contract will involve connecting the company’s 900,000 barrel storage facility near Edmonton to Bruderheim.

Access to Bruderheim will be available to both Canadian Pacific Railway and Canadian National Railway.

—Gary Park