Canexus Corporation’s board of director has approved plans to expans its North American Terminal Operations at Bruderheim AB, Canada, to include pipeline-connected unit train operations. The Corporation also announced that formal agreement has been reached with MEG Energy Corp to connect the Canexus Bruderheim terminal with pipelines which interconnect with the MEG Energy Stonefell Terminal, and to provide terminaling services to MEG for the loading of bitumen blend for transport by rail and the receiving of diluent shipments by rail.
In this next phase of NATO expansion, Canexus plans to connect the Bruderheim terminal by pipeline (24 inch bitumen blend line and 12 inch condensate line) to MEG's pipelines which interconnect with MEG's Stonefell Terminal, as well as potentially to a second pipeline connected facility located nearby. In addition, it plans to build out the rail infrastructure, loading/offloading and above ground tank storage required to allow for unit train movement of up to 118 tank cars (approximately 70,000 barrel movements) in single trains daily. The cost of the project is expected to be approximately $125 million, inclusive of the $45 million of pre-spending authorized by the board to date for long lead items and other construction activities that are currently underway. This expansion will be financed from the common share offering announced on November 29, 2012 (the "Offering," which is expected to close on December 19, 2012), excess distributable cash, committed credit facilities, and DRIP proceeds. The expanded capabilities should be operational in the third quarter of 2013.
"We are pleased to announce full project approval of the expansion of our Bruderheim terminal capabilities that will include pipeline connected unit train operations for large scale movements of bitumen blend and diluent by rail," says Gary Kubera, president and chief executive officer. "Agreement has been reached with MEG Energy Corp to connect Bruderheim with the MEG Energy Stonefell Terminal. Significant progress on a potential second pipeline/terminal connection to Bruderheim has also been made and negotiations are proceeding with additional customers for unit train shipments from Bruderheim under multi-year, take-or-pay terms."
The Corporation expects this next phase of NATO expansion to be accretive to all common shareholders after considering the common share offering announced on November 29, 2012 (including the over-allotment option if exercised). This next phase of expansion sets the stage for future incremental unit train capability, utilization of the existing 1.6 million barrels of salt cavern storage, development of additional salt cavern storage and pursuit of other attractive investment opportunities at this 480 acre site.