EDMONTON, May 28 /PRNewswire-FirstCall/ -- Canadian Pacific announced today it has sought regulatory approval to construct rail lines to serve planned and existing bitumen upgraders northeast of Edmonton in Alberta's developing Industrial Heartland.
"Acquisition of the necessary land to assemble the rail right of way was a strategically important initiative for CP," said CP President and CEO Fred Green. "It strengthens CP's commitment to the growth objectives of the oil sands industry, contributes to lasting economic benefits for the Province of Alberta, and provides significant scope for CP shareholder value creation."
The railway has made arrangements for 16 miles of right of way that will provide the ability to develop direct rail service to industries locating on either side of the North Saskatchewan River. The "project description," the first step in the regulatory process, will be filed with the Canadian Transportation Agency immediately.
"CP's expansion will provide rail access to new markets for the industries which have made, or will make, the decision to invest in the Industrial Heartland," said Green. "Our objective will be to build in tandem with the oil sands upgraders and related businesses to create a new network of rail access and strengthen the industry's supply chain competitiveness in world markets."
To lay the foundation for this significant multi-year growth initiative, CP will immediately invest $15 million in capital for new infrastructure to increase fluidity and distribution and logistics capacity. CP will first offer expanded transload capabilities for in-bound construction materials, including dimensional shipments required by the upgraders.
"Our vision is to create a rail network focused on the movement of by-products created from upgraders in the Industrial Heartland which include sulphur, petroleum coke, asphaltene and various liquids and gases," said Ray Foot, CP's Vice-President of Marketing and Sales, Merchandise. "While the market potential varies based on the timing of the upgraders and facilities, the total rail market will be significant and we will work closely with producers and governments at all levels to pace the right level of capital investment to new business opportunities."
"The added benefit of this expansion offers numerous community and environmental benefits to residents, the energy sector, and the community," said Foot. "A single train can replace as many as 280 trucks. This project will significantly reduce traffic congestion, noise and environmental impact in the area."
Canadian Pacific, through the ingenuity of its employees located across Canada and in the United States, remains committed to being the safest, and most fluid railway in North America. Our people are the key to delivering innovative transportation solutions to our customers and to ensuring the safe operation of our trains through the more than 900 communities where we operate. Our combined ingenuity makes Canadian Pacific a better place to work, rail a better way to ship, and North America a better place to live. Come and visit us at http://www.cpr.ca/ to see how we can put our ingenuity to work for you. Canadian Pacific is proud to be the official rail freight services provider for the Vancouver 2010 Olympic and Paralympic Winter Games.
Please see Canadian Pacific and Alberta Industrial Heartland Backgrounder
for more information
Canadian Pacific and the Alberta Industrial Heartland
- Alberta's Industrial Heartland (the "Industrial Heartland") is an
association formed in 1999 by four municipalities: the City of Fort
Saskatchewan, Strathcona County, Sturgeon County and Lamont County to
promote development of a large block of land zoned for heavy
industrial use.
- Oil sands upgrader construction activity and other energy-industry
related developments are currently underway or have been recently
announced in the region, creating a demand for increased
transportation services and, specifically, additional rail capacity.
In addition to the existing AOSP Scotford Upgrader currently being
expanded and the BA Energy upgrader currently being constructed, four
other firms have announced plans for upgraders in the Industrial
Heartland, Fort Hills, Northwest Upgrading, North American Oil Sands
Corporation and Total. Additional upgraders such as the Northern
Lights project are possible.
- Canadian Pacific (CP) has assembled the necessary land and route, and
is applying to the Canadian Transportation Agency (CTA) to build rail
lines that will serve new oil sands upgraders and other facilities.
- Canadian Pacific's Scotford Subdivision is the key rail corridor
connecting CP's Calgary to Edmonton main line with Alberta's
Industrial Heartland region. Running 36.5 miles north-east from
Edmonton to Scotford, CP's operations on the Scotford Subdivision
serve established customers such as Shell Canada, and its existing oil
sands upgrader facility at Scotford.
- CP maintains daily service connecting its Scotford Yard facility with
main line connections at Edmonton. With expansion underway at Shell's
existing Strathcona County Upgrader, CP is looking to add capacity to
its Scotford Yard in addition to its Industrial Heartland expansion
project.
- CP is proposing the addition of a new Sturgeon Subdivision which will
provide rail service to shippers located on the north side of the
North Saskatchewan River in Sturgeon County.
- The Sturgeon Subdivision is proposed to run north through industrial
zoned property within Strathcona County to a crossing of the North
Saskatchewan River. A proposed bridge over the North Saskatchewan
River will align the Sturgeon Subdivision to follow west and route
through a proposed Upgrader site.
- On the Sturgeon Subdivision, CP is also proposing a potential
marshaling yard facility designed to meet the service requirements of
customers on the north side of the North Saskatchewan River and, a
spur line to meet future business development projected for Sturgeon
County and to provide a location for trans-loading operations.
- CP's long term focus is on moving by-products created from the
Industrial Heartland area upgraders which include sulphur, petroleum
coke, asphaltene and various liquids & gases. Market potential varies
based on the timing of construction projects, but total rail market
potential is significant.
- CP's short term focus is on inbound construction material, including
steel, pipe, cement, vessels, modules, etc. However, total market
potential is largely dependent on the timing of construction projects.
Oils Sands Development - Quick Facts
- Alberta's oil sands are one of the earth's largest bodies of oil.
Proven reserves are 174 billion barrels, second only to Saudi Arabia.
All current commercial oil sands deposits are located in northern
Alberta. In 2005, annual oil sands production reached 1.1 million
barrels per day (bpd). In 2006, Canada's National Energy Board
forecast that base case bitumen production would rise to 3.0 million
bpd by 2015.
- Even when using only proven reserves, Alberta's bitumen resource would
be sufficient to handle Canada's domestic oil demand for 250 years.
- Typical oil sands deposits are comprised of 75-80% inorganic material
(quartz sand, silt and clay predominantly), 10-12% bitumen and 3-5%
water.
- Bitumen normally consists of very long chain hydrocarbon molecules.
Relative to light crudes, bitumen has an excess of carbon or shortage
of hydrogen. Bitumen is virtually a solid at ambient temperatures.
- In order to make bitumen acceptable for conventional refineries, it
must be upgraded to Synthetic Crude Oil (SCO). This intermediate
process produces higher value Synthetic Crude Oil (SCO) and related
byproducts.
- Currently, two-thirds of the bitumen produced is upgraded into SCO in
Alberta before being shipped to downstream markets.
- While a wide range of technologies are used to upgrade bitumen, in
general the process consists of cracking bitumen under heat and
pressure in the presence of catalysts to break up the long chain
molecules into much smaller molecules. Excess carbon is then either
extracted from the bitumen or is combined with added hydrogen in order
to produce lighter hydrocarbons.
- Upgrading typically produces very light hydro-carbons known as "off-
gasses". Off gasses can be used as fuel in an upgrader, or if there is
sufficient quantity and economic value, some off gasses can be
processed and marketed separately as fuel or feedstock for
petrochemical plants.
- Bitumen also contains impurities, that may be extracted in the
upgrading process. Most upgraders choose to market "sweet" (low
sulphur) SCO and so extract sulphur, the largest contaminant, as part
of the upgrading process. Sulphur typically comprises up to 5% of
bitumen. In addition, small amounts of nitrogen may be extracted from
the SCO and marketed separately. Most of the byproducts produced by
upgraders can be marketed.
