Gibson Energy has entered into a joint venture with USD Partners to build and operate a diluent recovery unit (DRU) near Hardisty in Alberta, Canada.

The partnership has also signed an agreement with ConocoPhillips Canada for processing of 50,000 barrels per day of inlet bitumen blend through the DRU to be transported by Canadian Pacific and Kansas City Southern Railway Company to the US Gulf Coast.

The construction of the facility is likely to take around 18 to 24 months and is subject to certain conditions, including obtaining agreements to underpin the economics of the project and receipt of required regulatory approvals, including from the Alberta Energy Regulator.

The DRU is expected to be commissioned in the second quarter of 2021.

USD CEO Dan Borgen said: “Our DRU technology provides a sustainable, long-term solution for shipping Canadian crude oil to the U.S. Gulf Coast.

“DRUbit offers safety and environmental benefits in transportation, provides greater take-away capacity and improved economics for all parties.”

USD and Gibson to secure long-term agreements for additional 50,000 barrels per day at the proposed DRU

Presently, USD and Gibson are in commercial discussions with other potential producer and refiner customers to secure long-term, take-or-pay agreements for further 50,000 barrels per day at the proposed DRU.

Gibson’s president and CEO Steve Spaulding said: “We expect DRUs to be a critical part of solving the egress challenges Western Canadian producers are facing, both today and over the long-term.

“Improved netbacks for producers will drive increased oilfield and related business activity, create new jobs and help revive communities as well as positively benefit all levels of government through increased royalties and other levies.”

The DRUbit owned by ConocoPhillips will be railed by CP and KCS following separation at the DRU from the existing Hardisty Rail Terminal to a new terminal in Port Arthur, Texas under a long-term contract with CP, subject to standard conditions.

The new terminal in Port Arthur will be built, owned and operated exclusively by USD.  It will have a capacity for rail unloading, barge dock loading and unloading, tank storage and blending, and will be pipeline connected to Phillips 66’s Beaumont Terminal, providing customers access to a huge network of refining and marine facilities.