The train disaster in Quebec has done nothing to slow the development of rail terminals to move crude in Canada.
Three proposals have been unveiled in as many weeks, which one analyst thinks reflects delays in getting major pipelines approved by governments and regulators.
The latest project by Calgary-based Torq Transloading involves a C$100 million terminal near Kerrobert, in western Saskatchewan, to load two 120-car trains with 168,000 barrels per day of heavy crude, along with storage capacity for 500,000 barrels.
It follows on the heels of a plan by Gibson Energy and U.S. Development Group for a 140,000-barrel facility at Hardisty in central Alberta, and by Keyera and Kinder Morgan Energy Partners to build a 40,000-barrel terminal in Edmonton.
Steven Paget, an analyst with FirstEnergy Capital, said the stalling on pipeline decisions, especially TransCanada’s Keystone XL link from Alberta to the U.S. Gulf Coast, has prompted shippers to make commitments to rail terminals rather than lose out on favorable crude price differentials which traders have credited with narrowing those spreads.
Keystone approval questioned
The Keystone XL project, which has become the most contentious pipeline project in many decades, was supposed to start moving Canadian oil sands crude and Bakken light crude by 2012. Serious questions are now being asked about whether it will ever get approval from the Obama administration.
ARC Financial Corp. estimates that new rail facilities with combined capacity of 708,000 bpd are planned to come onstream in Canada by 2015, compared with about 150,000 bpd the currently moves on Canadian rails.
Torq said it is negotiating multiple pipeline connections for its Kerrobert terminal, which sits within the Saskatchewan portion of the Williston Basin.
The privately held midstream oilfield service provider, which already operates a web of six terminals in Alberta and Saskatchewan, expects the new facility will start operations in the third quarter of 2014.
Construction planned this fall
Torq Chief Executive Officer Jarrett Zielinski said construction should start this fall, assuming the company obtains a development permit.
The terminal will be served by Canadian Pacific Railway, which Torq acts for at Tilley, Alberta, and Lloydminster, Saskatchewan, while also operating on behalf of Canadian National Railway at Whitecourt, Alberta.
In addition, the company has operations at three Saskatchewan locations — Shaunavon, Unity and Bromhead.
“We feel that Kerrobert is strategic in that it allows maximum diversity and flexibility for crude-by-rail out of Western Canada,” Zielinski said.
The location “allows us not only access to vast amounts of pipeline delivered crude oil, but it also allows us to access significant quantities of heavy, undiluted crude in the Lloydminster-Kerrobert corridor.”
He said Kerrobert is as close as possible by rail to heavy crude’s natural destination markets.
Zielinski estimated the Kerrobert terminal could offer transportation savings to the U.S. Gulf Coast and east Coast of up to $5 per barrel compared with shipping similar crudes by rail out of certain locations in Alberta.
He said the project could also benefit the oil and gas industry in the area surrounding Kerrobert.
