Steam generators at Cenovus's Foster Creek project in northern Alberta.
Cenovus Energy Inc. has agreed to pay $75-million for a rail-loading terminal in Alberta, even as lower crude prices challenge the economics of shipping oil by train.
Cenovus announced the deal to acquire the facility from struggling Canexus Corp. late on Thursday.
The terminal is located roughly 50 kilometres northeast of Edmonton, and has the capacity to handle about 10 so-called unit trains a week, or roughly 70,000 barrels per day. An additional 30,000 barrels per day can be shipped by truck from the site.
"It really gives us an opportunity to reach out into markets where we believe we'll get higher prices for our production," said Reg Curren, a Cenovus spokesman.
The move comes amid a sharp drop in oil-by-rail shipments from Western Canada, a mode of transportation that boomed in recent years but has fallen out of favour as price spreads narrowed between U.S. crude and Alberta's extra-heavy oil.
Canadian exports of crude by train averaged roughly 116,000 barrels per day in the first quarter. That is down 27 per cent from the fourth quarter last year, as more producers opted to ship production by pipeline, the National Energy Board said.
Cenovus said the rail terminal is connected via the Cold Lake pipeline to its Foster Creek oil-sands site. The loading facility links to rail lines owned by Canadian Pacific Railway Ltd. and Canadian National Railway Co.
"We believe a key benefit of acquiring this facility is the ability it provides to quickly and economically expand rail car loading capacity in response to changing market conditions," Bob Pease, executive vice-president of markets, products and transportation, said in a statement.
"We expect rail will be an important component of our transportation strategy for years to come. As the owner of the facility, we reduce our risk of having to compete for expensive rail terminal capacity during periods of pipeline congestion or potentially having production volumes stranded."
The company plans to hire a third party to manage the facility. It said the terminal site could be expanded if market conditions improve.
The deal is expected to close on Aug. 31, subject to conditions.