Keyera, KMEP to build Edmonton crude oil rail loading terminal

Keyera Corp. and Kinder Morgan Energy Partners LP (KMEP) have formed a 50:50 joint venture to build a crude oil rail loading facility in Edmonton, Alta. When complete, the Alberta Crude Terminal will be able load oil streams handled at KMEP’s Edmonton Terminal for delivery via rail to North American refineries.

The Alberta Crude Terminal will be constructed next to Keyera’s Alberta Diluent Terminal on property recently acquired by a Keyera subsidiary. Keyera will operate the terminal, which will have 20 loading bays capable of loading a total of 40,000 b/d of crude oil into tank cars. It will be served by both Canadian National Railway and Canadian Pacific Railway.

KMEP and Keyera are also independently planning modifications to their respective facilities in the Edmonton area to facilitate delivery of crude oil to the Alberta Crude Terminal. KMEP is proposing to a 16-in. OD pipeline to connect its North 40 Edmonton Terminal to Keyera’s Edmonton Terminal. Keyera similarly plans to build a new 16-in. OD crude oil pipeline across its Edmonton Terminal to the existing Alberta Diluent Terminal connector pipeline and install additional pumping capacity. Keyera is also proposing a 12-in. OD condensate pipeline connecting the Alberta Diluent Terminal to Keyera’s Fort Saskatchewan Pipeline System.

Engineering work is under way on these projects, and the companies expect second-quarter 2014 commissioning of the new terminal, pending regulatory approvals and delivery of long-lead items.

Keyera expects its share of the cost of the Alberta Crude Terminal, as well as the land purchase, pipeline construction, and other facility modifications, to be about $65 million. KMEP expects its share of the cost, including modifications to the Edmonton North 40 terminal and connections to Keyera, to be roughly $33 million. Construction of the Alberta Crude Terminal is underpinned by a 5-year agreement with a major refiner.

In anticipation of additional demand for crude oil loading services, KMEP and Keyera are evaluating possible expansion of up to 125,000 b/d of additional crude loading capacity and the addition of a diluent recovery unit. The companies plan to begin commercial discussions to determine customer support for such an expansion shortly.

Contact Christopher E. Smith at chriss@ogjonline.com.

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