Gibson Energy Inc. (Gibson), a Calgary-based midstream energy company and U.S. Development Group LLC (USDG), a Houston-based developer of rail logistics and terminal facilities, announced that they have partnered to expand USDG’s industry-leading crude-by-rail development to Canada, and increase transportation optionality for Gibson’s Hardisty Terminal customers. Gibson and USDG have jointly secured sufficient customer term commitments to construct a new state-of-the-art unit train rail loading facility near Hardisty, Alberta, with pipeline connectivity from Gibson’s Hardisty Terminal.

“USDG has pioneered the crude-by-rail concept in key markets across the U.S.,” said Mike Day, USDG’s Vice-President. “With the Hardisty Rail Terminal, we have expanded the platform to accommodate increasing Canadian production. Developed in partnership with Gibson, the Hardisty Rail Terminal will give Canadian oil producers flexibility to obtain the best value for their product and refiners expanded access to price advantaged crude oil supplies.”

Rick Wise, Gibson’s Senior Vice-President Operations, stated, “Our Hardisty Terminal is well connected to all the major pipelines coming into and leaving the Hardisty area. The development of the Hardisty Rail Terminal provides our customers with more optionality to facilitate crude oil movements across North America. We continue to progress discussions with several customers in conjunction with USDG regarding further commitments to the Hardisty Rail Terminal.”

The Hardisty Rail Terminal will handle multiple grades of crude oil with an initial capacity of 140,000 barrels per day. All crude handled by the Hardisty Rail Terminal will be exclusively transferred by pipeline from Gibson’s Hardisty Terminal, located approximately five kilometres away. Served by the Canadian Pacific’s North Main Line, the Hardisty Rail Terminal will provide Canadian oil producers and marketers a safe and efficient method for transporting their product to major refining and distribution markets across North America.

“The Hardisty Rail Terminal will be a significant rail hub and is located on CP’s high-capacity North Main Line with efficient access to the refining markets across North America,” said CP Vice-President of Energy and Merchandise Tracy Robinson. “Canadian Pacific is pleased to work with USDG and Gibson in providing the capability to move crude to market via rail. The capacity, flexibility, market access and speed to market that rail offers makes it an important option for the transportation of crude.”

The Hardisty Rail Terminal will be capable of handling two unit trains up to 120 railcars each per day of and will consist of a fixed loading rack with 30 railcar-loading positions, plus a unit train staging area and loop tracks capable of holding up to five unit trains. The Hardisty Rail Terminal is targeted to begin operation in the first quarter of 2014.

As part of the project, Gibson will install required pumping equipment and construct a pipeline for the transfer of crude from its Hardisty Terminal to the USDG crude-by-rail facility. Term contracts with four investment grade customers for approximately 100,000 barrels per day and a connection agreement between Gibson and USDG provide the support for the capital investment.