CALGARY – Enbridge Inc. and privately-held Tundra Energy Marketing Ltd. are working together on a project to bring growing light oil production from Saskatchewan, Manitoba and North Dakota to market by rail.
Under a memorandum of understanding announced Tuesday, each company will own half of a loading terminal near Cromer, Man., which should be able to handle some 60,000 barrels of crude per day early next year.
The first 30,000-barrel-per-day phase, under construction, is expected to be up and running by July. It will receive crude from trucks and Winnipeg-based Tundra’s existing pipeline network.
The second phase will expand the facility by another 30,000 barrels per day and connect up with Enbridge’s (TSX:ENB) pipeline network in the Bakken, an oil-rich rock formation underlying parts of North Dakota and Saskatchewan, as well as Tundra’s gathering system in Manitoba.
Canadian National Railway Co. (TSX:CNR) will provide the rail service and Tundra will build and operate the terminal.
Enbridge’s participation will depend on whether it can get enough customers to commit to the project.
Oil producers in North America have been struggling to get their crude to the most lucrative markets as the fate of pipeline expansions, such as the Keystone XL pipeline, remain up in the air.
In the meantime, many firms are turning to rail as an alternative to transport their crude. It’s a more costly option than pipelines, and is seen largely as a stop-gap measure until pipeline bottlenecks are relieved.
Tundra’s parent company, Tundra Oil and Gas, is a subsidiary of privately-owned, family-run company James Richardson & Sons.