Canadian oil producer is researching use of more barges on the Mississippi River.
MEG Energy Corp., an Alberta-based oil sands company, has announced plans to transport more of the bitumen (viscous oil) it produces on barges down the Mississippi River to terminals in Texas.
In its quarterly report, the company says as part of its strategy to improve its access to markets it has recently signed leasing agreements for barges to provide transportation to markets throughout the U.S. Gulf Coast via U.S. inland waterways.
The company says this strategy will allow MEG to begin bypassing what it calls U.S. pipeline congestion and shift product pricing from the Edmonton, Alberta, and mid-continent markets to what it refers to as higher value markets on the Atlantic coast and U.S. Gulf Coast.
The company says its contracted capacity at rail terminals and on barges is expected to accommodate MEG’s mid-2013 production levels. Additional contracted capacity on its Flanagan South pipeline, which runs from Flanagan, Ill., and terminates in Cushing, Okla., is expected to be available by the middle of 2014. The company says this combination of pipeline access, along with continuing options for rail and barge transportation, is expected to provide MEG with reliable access to the best available pricing as the company’s production grows.
MEG is planning to ship the material from northern Alberta to Bruderheim, near Edmonton, then transport the material by rail or pipeline to Chicago canals and next to the Mississippi River system – where it will be loaded onto the barges to be shipped to refineries in the Gulf of Mexico area, according to the Globe and Mail newspaper, Toronto.
As production and capacity ramp up over the course of this year, MEG says it will be able to move up to 40,000 barrels per day by both rail and barge.
“With the idea that the barges and the rails can reach multiple refiners, it’s a fundamental shift in how the business is run,” MEG CEO Bill McCaffrey said during a financial results conference call, according to the Globe and Mail.