Multi-Phase Expansion Plans
Driven by customer demand, we are capitalizing the Bruderheim Terminal's strategic location and expanding our operations in two ways:
Since late 2011, we have undertaken a series of projects to increase our diluted bitumen and crude oil truck-to-rail transloading. We transloaded 16,200 bbls/day in Q4/13 and exited December 31, 2013 at a rate of 23,800 bbls/day. Our expansion is expected to provide 30,000 bbls/day of capacity.
In December 2013 we began start-up of a pipeline-connected unit train. The Terminal is connected with pipelines that interconnect with the MEG Energy Stonefell Terminal. We have long-term agreements with Inter Pipeline for delivery of bitumen blend from the Cold Lake pipeline system. We are guaranteed capacity of up to 100,000 bbls/d of Cold Lake Blend pipeline delivery. And we have a multi-year agreement with Cenovus Energy Inc. for bitumen blend pipeline receiving and unit train loading services at our Terminal.
Long-term Take or Pay Contract
In December 2013, we entered into a long-term, take-or-pay agreement with a midstream logistics and marketing company and leader in transporting crude oil by rail. With this contract, 60 to 70% of the expected unit train activity of 10 to 11 unit trains per week is now contracted for multiple years. The market fundamentals for oil-by-rail movements are strong, and based on late-stage discussions with multiple potential unit train customers, we expect to have the Bruderheim Terminal fully contracted in the near term.
Pipeline and Unit Train Growth Expansion
The pipeline-connected unit train project included building out the pipeline connection, rail infrastructure, loading/offloading and above ground tank storage. The next expansion to further increase terminal loading capacity is expected to be operational by Q3/14, to coincide with completion of the second pipeline connection to the Cold Lake pipeline system. The total estimated cost of the project is $315 million.
Setting the Stage for Future Expansion
Looking ahead, there is opportunity to increase our unit train capability, utilize our existing 1.6 million barrels of salt cavern storage, develop additional salt cavern storage and pursue other attractive investment opportunities at this 480-acre site.