KMI, Keyera to build crude storage terminal near Edmonton

Kinder Morgan Inc. (KMI) and Keyera Corp. have formed a 50-50 joint venture to build the 4.8-million-bbl Base Line above-ground crude oil storage terminal near Edmonton, Alta.

The terminal will be built on undeveloped land at Keyera’s Alberta EnviroFuels site, and is expected to be commissioned in phases, with the first tanks slated for commissioning in second-half 2017.

Keyera says sufficient land remains to add up to 1.8 million bbl of incremental storage capacity subject to future demand. The project is underpinned by several take-or-pay agreements ranging to 10 years in length.

The terminal will be connected via pipeline to KMI’s Edmonton terminals and capable of sourcing all crude streams handled by the company for delivery to multiple destinations, including—but not limited to—Kinder Morgan’s Trans Mountain pipeline and two Edmonton rail terminals, and other major export pipelines (OGJ Online, Aug. 22, 2014).

The two companies previously formed a JV to build the Alberta rail terminal (OGJ Online, Aug. 2, 2013). KMI and Imperial Oil later teamed up to build the Edmonton rail terminal (OGJ Online, Dec. 26, 2013).

KMI will oversee construction of the project and operate the new terminal once it is in service.

KMI’s investment in the joint venture terminal is $342 million (Can.), including capitalized interest, and the company will invest up to an additional $69 million outside the JV for connecting pipelines and related infrastructure for a total project investment of $411 million.

Keyera’s share of costs to construct the terminal is estimated at $330 million (Can.), excluding capitalized interest.

“Edmonton is playing an increasingly important role as a North American crude oil hub, demonstrated by the growth of inbound and outbound pipeline capacity,” explained John Schlosser, KMI terminals president. “As such, it needs additional crude storage capacity, and our customers’ commitments affirm that growing need.

“When this initial project is completed, we will have grown our merchant storage, exclusive of our Trans Mountain regulated storage assets, from basically zero tankage to a 12-million-bbl position in roughly a 10-year period,” Schlosser said.

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