Southern Pacific completes arrangements to transport and market bitumen via CN to the U.S. Gulf Coast.
Southern Pacific Resource Corp. (TSX:T.STP, Stock Forum) said it has completed a long-term arrangement to transport its bitumen to the U.S. Gulf Coast via the rail network of Canadian National Railway Co (TSX:TCNR, Stock Forum) (NYSE:CNI, Stock Forum).
According to a press release, this agreement is expected to allow Southern Pacific to generate attractive returns from Phase 1 of its STP-McKay Thermal Project, the only new steam-assisted gravity drainage oil sands project anticipated to start up in 2012.
STP-McKay is located about 45 km northwest of Fort McMurray, Alta. Phase 1 is designed to recover 12,000 bbl/d of bitumen.
Under this arrangement, Southern Pacific's bitumen volumes will be trucked approximately 60 km from the STP-McKay plant gate to Lynton, Alta., a CN rail terminal located immediately south of Fort McMurray.
From Lynton, volumes will be transferred into rail cars and shipped approximately 4,500 km over CN's network and a short-line rail partner to a terminal in Natchez, Miss.
The bitumen will then be transferred to barges that will deliver the product as feedstock to refineries on the Gulf Coast.
Shipments could start as early as the fourth quarter of 2012, according to CN.
Southern Pacific is engaged in the exploration, development and production of in-situ thermal heavy oil and bitumen production in the Athabasca oil sands of Alberta and in Senlac, Saskatchewan.
On Wednesday, Southern Pacific was trading at $1.29 a share. The company has a market cap of $440.3 million, based on $341.3 million shares outstanding. The 52-week high and low was $1.92 and $0.87 respectively.