Hardisty is the largest oil storage hub in Canada with over 21 MMBbl of tank capacity owned by seven companies. The largest player Enbridge has more than 12 MMBbl of storage with the majority being leased to third parties including a sizeable chunk to investment bankers JP Morgan. Western Canadian Select (WCS) the benchmark Canadian heavy crude is blended at Husky’s Hardisty terminal. Today we detail these two companies’ operations at Hardisty.
Recap
This is Part 5 of our series on Canadian crude oil storage. In Part 1 we looked at increasing Canadian crude oil production and expanding pipeline capacity in the two crude marketing hubs of Edmonton and Hardisty. These hubs are the staging posts for crude oil exports to the US as well as the distribution point for diluent supplies coming into the oil sands production region. In Part 2 we turned our attention to the relationship between Canadian crude pricing, congestion on the crude pipelines leaving Edmonton and Hardisty, and storage inventory. The growth and use of storage capacity at Edmonton and Hardisty bears a strong relationship to price discounts that Canadian producers have had to swallow as a result of pipeline congestion. In Part 3 we looked at TransCanada and MEG Energy’s Edmonton storage expansion plans. In Part 4 we reviewed Kinder Morgan, Kayera, Gibson Energy, Enbridge and Pembina’s growth projects at Edmonton. This time we turn our attention to the Hardisty hub and detail Enbridge and Husky’s operations.
Edmonton Rail Terminal Update
After waiting patiently for Part 4 of our analysis, covering their expanding Edmonton storage terminal, Kinder Morgan chose last week (December 20, 2013) to announce yet another new rail unloading terminal (besides the Alberta Crude Terminal that they are building with Keyera at Edmonton). Thanks for the heads up guys! This time Kinder will partner with Imperial Oil to build the Edmonton Rail Terminal that will load 1 to 3 unit trains or 100 Mb/d of oil at start up expanding to 250 Mb/d down the road. The Edmonton Rail Terminal will be connected via pipeline to Kinder Morgan’s existing storage terminal and to both Canadian Pacific and Canadian National railroads. Imperial will be the baseload customer and has a long-term contract to ship the 100 Mb/d initial volumes. Construction is underway and expected to be completed by December 2014.
Hardisty
Current above ground storage capacity at Hardisty, according to our friends at Genscape (who monitor crude storage in Canada on a weekly basis) is 18.6 MMBbl. That total does not include 3.1 MMBbl of underground cavern storage owned by Enbridge Inc. so total Hardisty storage is 21.7 MMBbl. Enbridge is the largest owner of above ground storage at Hardisty with 9.2 MMBbl. Behind Enbridge in terms of storage capacity come Gibson Energy with 4.2 MMBbl, Husky with 2.5 MMBbl and TransCanada with just over 1 MMBbl of storage. Smaller storage holders at Hardisty are Spectra Energy, Flint Hills Resources (Koch) and Inter Pipeline (IPL). We will cover each of these in our analysis. Terminal capacity at Hardisty is currently being expanded through a number of projects associated with increased Canadian oil sands production, new pipeline projects entering and leaving Hardisty and a rail loading terminal.
Hardisty, a tiny town in east-central Alberta is Canada's equivalent to Cushing, OK the delivery point for the CME/NYMEX West Texas Intermediate crude futures contract (see You’re Doin’ Fine Oklahoma, Bad Moon Rising and Rollin’ on the River of Crude for more on Cushing storage). Hardisty is important because it sits at a crossroads connecting crude oil gathering systems in the Alberta oil sands region to large export pipelines that ship the crude to Eastern Canada and the US. The map below from a recent Gibson Energy investor presentation shows the layout of Hardisty storage terminals and lists the main pipelines inbound and outbound.
Source: Gibson Energy Investor Presentation and RBN Energy
