CALGARY—Cenovus Energy Inc. has agreed to purchase Canexus Corp.’s crude-by-rail transloading facility in Bruderheim, Alta., for $75 million.
The acquisition is part of Cenovus’s strategy to create a portfolio of transportation options designed to maximize market access and capture global prices for its oil.
“By purchasing this facility at an attractive price, we’re taking greater control over a larger part of the value chain for our product, which we believe will result in improved margins and higher returns for our shareholders,” said Bob Pease, Cenovus executive vice-president of markets, products and transportation. “Ownership gives us additional flexibility to get our growing crude oil production to market and allows us to reduce the risk to Cenovus due to pipeline congestion. It also increases our ability to access niche markets not served by pipeline.”
The terminal’s existing pipeline connections to the Cold Lake and Access crude oil pipeline systems, as well as its links to the Canadian Pacific and Canadian National rail lines, are strategically important.
Cenovus currently transports production volumes from its Foster Creek steam-assisted gravity drainage (SAGD) operation to Bruderheim on the Cold Lake pipeline. The terminal may be expanded at a relatively low capital cost if changing market conditions make rail economics more attractive. Additionally, there is undeveloped land included in the transaction that provides significant potential for Cenovus as it evaluates a number of possible value-added projects.
Cenovus says it plans to hire a third-party service provider to manage the rail car trans-loading facility. Cenovus began moving its oil through the facility in 2014 and has a multi-year agreement for bitumen blend pipeline receiving and unit train loading services.
The transaction is expected to close August 31, 2015, subject to certain conditions.