USD Group withdraws proposal to expand Alberta oil-by-rail facility

EDMONTON -- A company that was proposing to expand the size of a rail facility to double the number of trains it can load with Alberta oil has shelved the project.

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USD Terminals Canada announced in November that it wanted to construct new tracks and loading buildings at its rail terminal in Hardisty, southeast of Edmonton.

"USD Group has presently withdrawn its Canadian Environmental Assessment Agency (CEAA) application and is reviewing its options," Meg Martin, a spokeswoman for the company wrote in an email Monday.

"The company is not prepared to comment further at this time."

The federal agency told the company on Dec. 23 that its project would require an environmental review.

The agency now lists the status of the USD proposal as "cancelled" on its website.

Reeve Allan Murray of the Municipal District of Provost said the company's decision is disappointing, adding the expansion would have bolstered the tax base of the sparsely populated community.

Murray wonders if a combination of low oil prices and the agency's decision to require an environmental review made the project unattractive.

"It is hard to justify when another thing is thrown at you to go ahead," Murray said. "I wouldn't doubt that this environmental study was part of that."

He said USD has been a good corporate citizen and hopes the company reconsiders.

Hardisty Mayor Anita Miller called the company's decision unfortunate.

"But with the economy it isn't a shock," she wrote in an email.

"Any time a project gets cancelled it will affect the economy of the towns/village around it."

Under the proposal the expanded terminal would be able to load four trains each with 120 rail cars per day.

Last fall the CEAA said it was seeking public input on whether to review the proposal, which it said had potential for causing adverse environmental effects.

Christian Vezeau, an agency spokesman, said given the company's decision not to proceed there is nothing for it to assess at this time.

He said the agency has asked the company for more information.

"The agency requested that the proponent (USD Terminals Canada) clarify whether it intends to proceed with any components of the project," Vezeau wrote in an email Monday.

The USD Group website says its Hardisty facility is connected to a main Canadian Pacific Railway line that has the ability to connect to all the key refining markets in North America.

The company has said it pioneered the crude-by-rail concept.

A report submitted by USD to the agency last fall said the expansion is needed to provide another method to pipelines for delivering oil products to market.

Construction of the first phase of the project was to begin last month and be completed by December 2016.



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