Cromer is diversifying its portfolio.
Tundra Energy Marketing and Canadian National Railway have signed a memorandum of understanding to construct a crude oil rail-car loading terminal in the Westman village.
Cromer is already home to Enbridge’s mainline pipeline system that aggregates crude from North Dakota, southeastern Saskatchewan and southwestern Manitoba to service the United States Midwest and Eastern Canada.
“We’re going to build a separate pipeline down to the CN tracks to a dedicated loading facility in Cromer,” president of Tundra Energy Marketing Bryan Lankester said.
The terminal, which is expected to be completed in the second quarter of 2013, is expected to load 30,000 barrels of cured oil or the equivalent of about 50 tank cars. And at full capacity, the terminal is expected to be able to accommodate a train of 100 tank cars, or about 60,000 barrels of crude per day.
“This gives us two routes to move crude on,” Lankester said. “It does provide — when Enbridge has operational issues — a second avenue to move crude out of Manitoba to alternative markets.”
While an additional route will secure movement of crude should there be problems with the pipeline, it also opens doors to existing markets for crude, Lankester said.
“We’re expanding the market for Manitoba crude to places in eastern Canada and the United States,” Lankester said.
That expansion should translate into more competition and a higher price for the same crude.
“It ensures us a better net back for the crude that Manitoba produces because the rail cars are going to areas that aren’t serviced by Enbridge,” Lankester said. “These rail cars are destined for Canadian refineries that currently do not have access to Canadian crude.”
The project, combined with a 410,000 barrel oil storage facility currently under construction, will result in more than a five times increase in existing capacity, Lankester said.
The investment speaks volumes to the sustainability of the oil industry in Manitoba, which produces a light sweet crude — low levels of sulfur — and light sour crude — high levels of sulfur.
“The wells have a very long lifespan,” Lankester said. “This is great for Manitoba and it ensures we can move Manitoba crude to markets with the best net-back on Manitoba’s production.”
Jean-Jacques Ruest, CN executive vice-president and chief marketing officer, said in a press release: “We are pleased to be a key supply chain enabler for Tundra Energy Marketing. CN will help Tundra’s customers reach markets with good net-backs for their crude. And further growth will be part of the story — the Cromer transload terminal is expandable, with the potential to handle complete crude oil unit trains of more than 100 cars, which will generate greater efficiencies and market reach for Canadian crude oil.”