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Cenvous purchases Bruderheim rail terminal

In order to ensure they have a consistently open route to ship their crude oil across the province, Cenovus Energy Inc. has purchased their own rail-loading terminal.

In order to ensure they have a consistently open route to ship their crude oil across the province, Cenovus Energy Inc. has purchased their own rail-loading terminal.

For $75-million Cenovus acquired a crude-by-rail trans-loading facility in Bruderheim, AB, about 50 kilometres northeast of Edmonton

The transaction for the facility, which was formerly owned by Canexus Corporation's North American Terminal Operations (NATO), officially closed on Aug. 31.

“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, Markets, Products and Transportation.

The terminal has strategic value for Cenovus as it is already connected to a pipeline, which goes from the Bruderheim terminal to the Cenovus operations in Foster Creek. It is also linked to the Canadian Pacific and Canadian National rail lines, which should open up more markets for exporting crude oil.

“The driving reason for the purchase of the facility is to ensure that we can still get out crude oil to market should their be pipeline congestion,” said Reg Curren, Senior Media Advisor for Cenovus.

“It is not just a Foster Creek advantage, it is a company wide advantage for us to have our own rail terminal giving us access to a facility that allows us to reach markets that aren't connected by pipeline.”

By expanding their shipping ability to include rail, Cenovus also expands their ability to customize the crude oil products they can ship around the country. Shipments via rail no longer have to be batched with other crude oils and diluents the way they would when shipped through a pipeline. Instead, Cenovus can create crude batches that match their customers needs.

“We believe a key benefit of acquiring this facility is the ability it provides to quickly and economically expand rail car leading capacity in response to the changing market conditions,” said Pease. “We expect rail will be an important component of our transportation strategy for years to come.”

The rail facility acquisition also gives Cenovus a much needed second option for shipping crude considering the company is about a year away from having another 100,000 barrels a day added between the expansions at Foster Creek and Christina Lake.

“By the end of 2016 we are going to have another 100,000 barrels per day capacity, obviously it will take time to ramp up but we needed to make sure that we have the ability to get that to market,” said Curren.

Cenovus has contracted Savage to work with Cenovus's on-site management team on the day-to-day management and operations of the Bruderheim Energy Terminal.

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