$210-million expansion will boost capacity at Kinder Morgan’s Edmonton oil tank farm

EDMONTON - U.S.-based Kinder Morgan Energy will spend $210 million to add seven oil storage tanks capable of holding 2.4 million barrels of crude and condensate at its Edmonton terminal. Construction is expected to start early next year and be complete by late 2013.

Located just east of the city limits in Strathcona County, the terminal is adjacent to the Imperial and Suncor refineries and tank farms and serves as the base for the Trans Mountain Pipeline, Alberta’s only current link to the Pacific, which runs west through Jasper and then south through B.C. to Kamloops and Vancouver.

Much of the crude goes by pipeline to Washington state’s Puget Sound refineries, while the rest is loaded onto tankers for export. The line also carries refined petroleum and supplies the Vancouver International Airport with jet fuel.

Kinder Morgan already has approval from the National Energy Board for the new tanks, the first phase of a three-phase project that would have a total capacity of six million barrels. Each phase will be built according to market demand and the firm said it has begun seeking commercial support for the second phase of tank expansion.

“This project was originally proposed in 2007, and after the market recession, was put on hold until the economic conditions improved. This project is not being pursued as part of the plans for Trans Mountain expansion,” said spokesman Andrew Galarnyk.

The current Trans Mountain line can now handle up to 300,000 barrels per day and a planned expansion could add 200,000 bpd or more of new capacity by 2017.

“The new (Edmonton) tankage will provide Alberta producers, marketers and refiners additional crude oil and condensate storage options as oilsands production increases and crude oil prices remain volatile,” said Bill Henderson, vice-president of Kinder Morgan Canada Terminals, in a statement.

He added the new tanks “allow for unparalleled upstream feeder pipeline connectivity and access to all downstream market outlets, including direct connections into Trans Mountain Pipeline.”

Ian Anderson, president of Kinder Morgan Canada, said the new tanks, “add a very important component to Trans Mountain Pipeline’s expansion plans and will provide our existing and potential customers with significant crude staging flexibility.”

Galarnyk said “customers have indicated that there is a need for merchant storage in the Edmonton area that would permit these customers to access the Trans Mountain system as well as provide volumes to other refineries and pipelines in the Edmonton area.”

With volatile prices in the marketplace, dedicated tankage allows customers to manage where or when their oil will flow.

“Should markets/prices change or pipeline issues occur, customers can take more volumes into storage or release volumes to market to mitigate adverse events or take advantage of opportunities,” said Galarnyk.

And with oilsands production set to increase over the next few years, producers, marketers and refiners will continue to require additional storage, he said.

dcooper@edmontonjournal.com