Keyera Corp. and Kinder Morgan Energy Partners L.P. have entered into a joint venture to build a new crude oil rail loading facility in an industrial area of northeast Edmonton. And the project is drawing mixed reactions.
The facility at 850 Hayter Road, which will be called the Alberta Crude Terminal, will be able to load crude oil handled at Kinder Morgan’s Edmonton Terminal onto trains for delivery to North American refineries.
The terminal will have 20 loading spots and will be able to load about 40,000 barrels of crude oil into tank cars per day.
The City’s chief economist, John Rose, says that while that volume is relatively modest, it will create added flexibility for oil producers in the region.
“From an economic perspective, from the point of view of the prosperity of Edmonton and the province, this facility gives…oil producers additional options as opposed to strictly relying on pipeline to move their oil. And it also gives them additional options in terms of where that oil goes.”
Even though he doesn’t believe that the operation will generate a significant number of jobs in the area, he thinks its impact will still be felt.
“What is good for areas north of Edmonton is good for the city of Edmonton, in terms of spill over, in terms of jobs, people coming into the city, people sourcing materials and equipment from within the city itself,” Rose explains.
“It will (also) have a significant positive impact on pricing that is set in the Edmonton area for oil, because you will have an additional flexibility in terms of being able to move that oil – even if pipeline capacity is constrained.”
But some are concerned about the safety implications, especially given the recent tragedy in Lac-Megantic, Quebec.
“We now have these things called virtual pipelines, where the entire train is filled with oil, and this is new. And the problem is when something goes wrong, it can go very wrong….It’s what (risk) experts call low probability, high consequence,” says Keith Stewart with Greenpeace Canada.
David Smith, President and COO of Keyera, says he understands the concerns.
“All I can say is that Keyera has a very strong record of safety in the operation of all of our facilities.”
“I know that safety is one of their first rules foremost in their minds,” says Tony Caterina, Edmonton city councillor for Ward 7. “And here we’re talking about some very large companies that certainly, I imagine, would have that at the forefront of their planning.”
Keyera will pay for about $65 million of the costs of the project, while Kinder Morgan will pay approximately $33 million.
The new terminal is expected to be commissioned during the second quarter of 2014, pending regulatory approvals.
The companies are also already looking into a possible expansion, that would allow them to move up to 125,000 barrels per day of crude oil.
With files from The Canadian Press and Ross Neitz, Global News