Keyera Corp. announces construction of South Cheecham Terminal and agreement with Statoil

Keyera Corp. will be proceeding with construction of the Keyera South Cheecham Rail and Truck Terminal (the “Terminal”), located approximately 75 km southeast of Fort McMurray. The Terminal will be a multi-purpose hydrocarbon rail and truck terminal, designed to support bitumen producers within the Athabasca oil sands area.

Keyera previously announced that it was exploring the development of a terminal in the South Cheecham area subject to sufficient customer interest in the project. On June 19, Keyera entered into a minimum four-year fee-for-service agreement with Statoil Canada Ltd., which is sufficient to underpin the construction of the first phase of the Terminal. The agreement with Statoil includes provision for Keyera to provide diluent, dilbit and solvent terminalling services through the Terminal. In addition to the Terminal, Keyera will construct and operate pipeline connections between the Terminal and Statoil and partner PTTEP’s Cheecham Terminal, approximately 12 km north. Keyera will begin receiving revenue under the Statoil agreement upon start-up of the Terminal in 2013.

“This investment at the Keyera South Cheecham Terminal will strengthen our position in this region and enhance our ability to provide services to oil sands producers such as Statoil,” said Jim Bertram, chief executive officer of Keyera. “We are delighted to partner with a global energy company such as Statoil and provide services that will support its world-class oil sands projects. The Terminal represents the next step in the development of our oil sands services growth strategy as we continue to deliver on our commitment to provide various cost effective services to oil sands producers.”

Keyera currently plans to develop the Terminal in phases as demand for terminalling services evolves. In addition to the facilities for handling diluent and dilbit at the Terminal, the initial phase will include a dilbit pipeline connection to Enbridge’s Cheecham terminal.  Engineering and site preparation for the first phase of development are already underway. Completion of the first phase is expected in the first half of 2013 at an estimated gross total cost of approximately $90 million. Delivery of equipment and construction delays are the key variables in achieving the on-stream date. Under the terms of a Memorandum of Understanding with Enbridge Inc., Enbridge may elect to participate in the Terminal as a 50 per cent joint venture partner.