CALGARY — Canadian Pacific (TSX:CP) has begun to move crude oil from a new terminal near Lloydminster, Sask., as part of the railway’s plans to expand services for the energy sector.
The strategy comes at a time when CP — already a major carrier of other types of resource commodities produced in Western Canada, such as potash, grain and coal — is under shareholder pressure to improve operational performance.
There’s also increased interest in rail as an alternative way to carry oil, given the regulatory and public relations hurdles that Enbridge Inc. (TSX:ENB) and TransCanada Corp. (TSX:TRP) face as they try to expand their pipeline networks.
CP and Montreal-based Canadian National (TSX:CNR), which each have rail networks that span much of Canada and reach deep into the southern United States, are also in a position to move crude to western ports for export to Asia.
Canadian Pacific said Thursday it will serve the needs of NuStar Energy LP (NYSE:NS) initially by shipping crude along its North Main Line infrastructure from the new transload terminal near Lloydminster.
The Lloydminster facility, operated by Torq Transloading, will load crude brought in by truck onto rail cars for delivery to NuStar’s terminals in the Northeast U.S. and Gulf Coast.
“This new facility and the planned expansion in 2012 represent an exciting growth opportunity for CP’s energy portfolio,” said Tracy Robinson, CP vice-president for energy and merchandise.
NuStar President and CEO Curt Anastasio said that “moving undiluted heavy Canadian crude by rail to coastal markets is an economically viable solution that brings added value to the end users, as well as the producers in Canada.”