It is the latest, and largest, in a recent rush of Western Canadian crude-by-rail projects as producers seek alternatives to congested pipelines to transport their crude to U.S. refining markets.

The Kerrobert Rail Terminal, to be served by Canadian Pacific Railway, will load two 120-car unit trains per day that will each carry both light and heavy crude.

TORQ Chief Executive Jarrett Zielinski said the location of the terminal in the southeast end of the oil sands region means shippers will be able to save about $5 a barrel on transporting crude to the U.S. Gulf Coast and to the East Coast, compared with shipping crude by rail out of northern Alberta, the center of the oil sands region.

Gibson Energy Inc, another midstream oil services company investing in train terminals to ship crude, has said it costs $14-$17 per barrel to transport crude from Hardisty, Alberta, to the U.S. Gulf Coast.

“Kerrobert, Saskatchewan, is geographically as close to the heavy crude’s natural destination markets as possible by rail, minimizing transportation costs relative to similar crude types to be shipped by rail originating further north and west in Alberta,” Zielinski said.

Privately owned TORQ is negotiating pipeline connections to deliver crude to the terminal, which will also take deliveries by truck.

The project will include storage tanks with up to 50,000 barrels of capacity, including heated storage that can handle undiluted conventional heavy oil from the Lloydminster region on the Alberta-Saskatchewan border, which is too viscous to flow through pipelines unless it is diluted with condensate.

An increasing number of Canadian producers are starting to transport heavy oil and raw bitumen in heated rail cars, to save on the cost of adding condensate.

The Kerrobert terminal has been designed to also accept inbound condensate deliveries by rail.

The practice of shipping crude oil by rail has come under heavy scrutiny since a tanker train blew up in a Quebec town last month, killing 47 people.

This week the rail regulator, the Canadian Transport Agency (CTA), said it would shut down the railway involved in the Quebec disaster because it does not have enough insurance to pay for clean-up costs and other damage.

A spokesman for CP Rail, which will serve the new Kerrobert terminal, said CP meets the requirements of the CTA, including having appropriate insurance.