Steve Horn • Monday, June 12, 2017 – 18:08
USD Partners, a rail terminal operator owned in part by Wall Street giant Goldman Sachs, has signed a nearly three year deal to facilitate moving tar sands by train from where it is extracted in Alberta, Canada, to an offloading terminal in Stoud, Oklahoma, in a route mirroring that of the Keystone XL pipeline.
From Stroud, the heavy oil can be sent via pipeline to the nearby oil storage hub in Cushing, Oklahoma. USD’s announcement, which said the company could transport up to 70,000 barrels per day of tar sands in rail cars, came in a June 2 filing with the Securities and Exchange Commission (SEC).
The deal, centering around the purchase of the Stroud terminal, also included the acquisition of 300,000 barrels of storage space in Cushing, a town known by oil and gas industry observers as the “pipeline crossroads of the world.”
“We are proud to announce the successful repositioning of an underutilized asset to create a competitive network solution for our new customer’s growing oil sands production,” Dan Borgen, CEO of USD Partners, said of the deal in a press release. “Our Hardisty to Stroud rail solution delivers immediate takeaway capacity, preserves the integrity of our customer’s heavy barrels and enables substantial end market optionality at Cushing with available pipeline capacity to the Gulf Coast.” (Note: Tar sands are also known as “oil sands.”)
Ironically, as reported by DeSmog’s Justin Mikulka, Goldman Sachs penned a 2013 report titled, “Getting oil out of Canada,” which said tar sands–by-rail was not economically viable. However, in the years following that report, USD, with the backing of Goldman, has entrenched itself more deeply in the tar sands–by-rail market.
In Hardisty, Alberta, where the tar sands–by-rail journey begins, USD Partners owns a major oil-by-rail shipping facility. The Hardisty facility currently has the ability to handle two tar sands–by-rail shipments per day, equivalent to 120,000–140,000 barrels per day of crude. This latest deal will represent a quarter of the site’s business.
“Inbound product” shipped from Alberta to Stroud “is delivered by the Stillwater Central Rail, which handles deliveries from both the BNSF and the Union Pacific railways,” explains the USD Partners press release. BNSF is owned by Warren Buffett, who is a major campaign contributor to Democratic Party candidates, including 2016 Democratic Party presidential nominee, Hillary Clinton and former President Barack Obama.
Canadian Prime Minister Justin Trudeau has shown deep support for tar sands development, to the dismay of environmentalists.
“No country would find 173 billion barrels of oil in the ground and just leave them there,” Trudeau said in March at CERAweek, a major oil and gas industry conference held in Houston, Texas. “The resource will be developed. Our job is to ensure that this is done responsibly, safely, and sustainably.”
The tar sands have a larger carbon footprint than other oil products when accounting for the product’s entire life cycle — making it bad news for the climate.
“Tar sands crude … would have a carbon footprint of 632 kilograms per barrel,” InsideClimate News explained in an April 2017 story, pointing to an environmental impact statement done for Enbridge’s Line 67 pipeline, a tar sands–carrying pipeline. “That compares to an average U.S. refinery mix of 521 kilograms per barrel of carbon dioxide emissions.”