Keyera Corp. announces joint venture

Keyera Corp. and Kinder Morgan Energy Partners L.P. have announced a 50-50 joint venture to build the Alberta Crude Terminal in Edmonton.

  • Aug. 6, 2013 8:00 a.m.

Keyera Corp. and Kinder Morgan Energy Partners L.P. have announced a 50-50 joint venture to build the Alberta Crude Terminal in Edmonton. When complete it will accept crude oil streams handled at Kinder Morgan’s Edmonton Terminal for loading and delivery via rail to refineries anywhere in North America.

“We are delighted to partner with Kinder Morgan, one of the premier pipeline transportation and energy storage companies in North America,” said David Smith, president and COO 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.”

“Keyera is a key and significant midstream 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. “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.”

The Alberta Crude Terminal will be constructed next to Keyera’s Alberta Diluent Terminal on land recently acquired by a Keyera subsidiary. The Alberta Crude Terminal, which will be operated by Keyera, will have 20 loading spots capable of loading approximately 40,000 barrels per day of crude oil into tank cars and will be served by both Canadian National Railway and Canadian Pacific Railway. Officials say the location is well situated to provide this 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 independently planning modifications to their respective plants in the Edmonton area to allow delivery of crude oil to the Alberta Crude Terminal. Kinder Morgan is proposing to construct a 16-inch pipeline to connect its North 40 Edmonton Terminal to Keyera’s Edmonton Terminal. Keyera plans to construct a new 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 is also proposing to construct a new 12-inch condensate pipeline connecting the Alberta Diluent Terminal to Keyera’s Fort Saskatchewan pipeline system.

Engineering work is well underway on these initiatives, and commissioning of the new terminal is targeted for the second quarter of 2014, assuming receipt of regulatory approvals and delivery of long-lead items on a timely basis. Keyera’s share of the cost of the Alberta Crude Terminal, as well as the land purchase, pipeline construction and other modifications, is expected to be approximately $65 million. Kinder Morgan’s share of the cost of the Alberta Crude Terminal including modifications to the Edmonton North 40 terminal and connections to Keyera is expected to be approximately $33 million. Construction of the Alberta Crude Terminal is underpinned by a five-year agreement with a major refiner.

In anticipation of additional demand for crude oil loading services, Kinder Morgan and Keyera are currently evaluating a possible expansion of up to 125,000 barrels per day of additional crude loading capacity and the possible addition of a diluent recovery unit. The commercial discussions to determine customer support for such an expansion are expected to begin shortly.