Kinder Morgan and Candian firm to build crude oil terminal

Houston’s Kinder Morgan Energy Partners and Canadian midstream company Keyera Corp. announced plans Tuesday to jointly build a crude oil rail loading facility in Edmonton, Alberta.

The project, a 50-50 joint venture to be called the Alberta Crude Terminal, will be able to accept crude oil that is handled at Kinder Morgan’s Edmonton Terminal for loading and delivery via rail to refineries throughout North America.

“Keyera is a key and significant mid-stream company in western Canada and we are pleased to be able to join forces with them to enable additional market export options for the Canadian producer and supply options for the North American refining industry,” said Bill Henderson, vice president for Kinder Morgan Canada Terminals said in a statement. “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.”

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Added David Smith, president and chief operating officer of Keyera: “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 constraints currently being experienced by the Alberta energy sector.”

The Alberta Crude Terminal will be operated by Keyera and have 20 loading spots capable of loading approximately 40,000 barrels per day of crude oil into tank cars. It will be served by the Canadian National and Canadian Pacific railways.

The companies say the location is well situated for the service  as the Edmonton area is western Canada’s primary oil hub where Alberta crude oil is aggregated before being delivered to markets across North America.

Kinder Morgan and Keyera are also separately planning modifications to their respective facilities in the Edmonton area to facilitate delivery of crude oil to the Alberta Crude Terminal.

Kinder Morgan is proposing to build a 16-inch pipeline to connect its North 40 Edmonton Terminal to Keyera’s Edmonton Terminal. Keyera plans to construct a 16-inch crude oil pipeline across its Edmonton Terminal to join to the existing Alberta Diluent Terminal connector pipeline and install additional pumping capacity. In conjunction with this project, Keyera also is proposing to construct a new 12-inch condensate pipeline connecting the Alberta Diluent Terminal to Keyera’s Fort Saskatchewan Pipeline System.

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Engineering work is underway for the projects and the new terminal is slated to be running in the second quarter of 2014.

Kinder Morgan’s share of the cost of the new terminal, including modifications to the Edmonton North 40 terminal and connections to Keyera, is expected to be about $33 million.  Keyera’s share of the cost of the new terminal, as well as the land purchase, pipeline construction and other facility modifications, is expected to be about $65 million.

A major refiner has already signed a five-year agreement to use the new terminal, the companies said.