Southern Pacific Resource Corp. Completes Arrangements to Transport and Market Bitumen via CN to the U.S. Gulf Coast
Advised South Pacific Resources Corp. in connection with its long-term arrangement to transport its bitumen to the U.S. Gulf Coast via the rail network of CN.
Wednesday, 27 June 2012
On June 27, 2012, Southern Pacific Resource Corp. ("Southern Pacific") announced the completion of a long-term arrangement to transport its bitumen to the U.S. Gulf Coast via the rail network of CN. Under this arrangement, Southern Pacific expects to significantly increase its plant gate bitumen netback using rail transportation that reduces diluent costs, and offers access to Brent-based pricing as opposed to selling its bitumen into a pipeline that offers access to West Texas Intermediate (WTI) based pricing.
This agreement is expected to allow Southern Pacific to generate attractive returns from Phase 1 of its STP-McKay Thermal Project, the only new steam assisted gravity drainage oil sands project anticipated to start up in 2012. This arrangement is also significant to Southern Pacific as it demonstrates that alternatives to conventional pipelines are available to market bitumen from the Athabasca oil sands. This has implications not only for Southern Pacific shareholders through higher netbacks, but also for Albertans through increased royalties and demonstrating another safe and viable alternative for transporting bitumen. The completed rail marketing solution includes agreements with CN, Rick's Oilfield Hauling, Altex Energy Ltd., Genesis Energy, L.P., CIT Group Inc. and Tauber Co.
Davis LLP represented South Pacific Resources Corporation in this arrangement with a team led by Brian Yaworski.
Brian Yaworski, Q.C., ICD.D