Kinder Morgan Energy Partners, L.P. (KMP) has formed a 50:50 joint venture with Imperial Oil Ltd. to build a crude oil rail-loading facility in Strathcona County, Alberta.
The facility – to be called the Edmonton Rail Terminal – will be constructed on the heavy industrial-zone around 500 meters south west of the partnership’s Edmonton storage terminal, on land that is close to Imperial’s Strathcona Refinery.
Currently, the Edmonton Rail Terminal is being planned as a crude oil loading terminal with one to three unit trains capacity per day. At start-up it will be able to ship about 100,000 barrels per day, with the potential to increase to about 210,000 barrels per day and eventually to 250,000 barrels per day.
A pipeline will link the new rail terminal to Kinder Morgan’s tank facility that will be capable of supplying all crude streams managed by Kinder Morgan for delivery by rail to North American markets and refineries. The rail terminal to be constructed and operated by Kinder Morgan will connect to both Canadian National and Canadian Pacific mainlines.
Imperial Oil has signed up for the start-up capacity through a long-term contract and will be the base-load customer. Both the parties are likely to invest around $170 million respectively, in the project, with the likelihood of further spending made by other companies.
Moreover, Kinder Morgan is expected to invest an additional $100 million for pipeline connections and two new staging tanks to be constructed within the Kinder Morgan Edmonton storage facility. The construction is now underway, with completion expected in Dec 2014. The project will play a vital role in improving access to markets for oil sands production.
Kinder Morgan Energy Partners carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the oil and gas sector include Harvest Natural Resources Inc. (HNR), Abraxas Petroleum Corp. (AXAS) and Tesco Corp. (TESO). All these stocks hold a Zacks Rank #1 (Strong Buy).
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