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900,000 bushels of grains and oilseeds per week into U.S. and
offshore export markets.
The facility will also move energy products such as crude oil
and liquefied natural gas by rail into the U.S.
“It is a diversification plan,” said Pat Bracken, Minnesota-
based CEO and board chair of Ceres, a commodity logistics
holding company that also owns the 132-kilometre Stewart
Southern Railway short line in southern Saskatchewan and
Riverland Ag Corp, which has 10 grain storage and handling
facilities dotting the map in Minnesota, New York, Wisconsin
and Ontario. “As they developed this project, they saw two
important industries in southern Saskatchewan and southern
Manitoba were underserviced, and that was agriculture and the
oil and gas industries.”
At the Northgate site, along with receiving and shipping
grain on one of the rail loops, Ceres is also developing crude oil
and natural gas storage and a rail loading facility to move those
commodities into the U.S. The crude oil and natural gas side
also has a temporary transloading system able to handle about
15,000 barrels of energy products per day. That is expected to
increase to about 60,000 barrels per day once its permanent
facility is operational in 2016.
“We are ready to move grain and oilseed commodities into
the U.S., so we are encouraging farmers to call us,” said Jim
Vanasek. He’s on the board of Ceres, and his New York-based
investment firm, VN Capital Management, is one of the major
Ceres shareholders.
“We are a regional operation, but plan to offer very
competitive pricing and services to farmers in the southern
Prairies,” he said. “As farmers in southern Saskatchewan
discovered last year, the existing Canadian system can be
challenged to have the rail service to meet demand for moving
grain.
“At Northgate, we have an agreement with BNSF to provide
rail service. We have a commitment they will have rail cars
available as we need them. It is the largest railway in the United
States. Once the trains are loaded, they can go east to port
position at Duluth, Minnesota, or west to Seattle ports, or
straight south to dozens of market destinations served by BNSF.”
BNSF has direct access to 28 American states, Mexico,
and numerous Pacific and Gulf of Mexico ports along a
51,500-kilometre rail network, including more than 45 crude-
by-rail destinations. BNSF also has secondary, or inter-line,
connections with many other U.S. interior locations and
Atlantic ports.
Vanasek said Canadian grains will be bought for a wide
range of North American and off-shore export markets. He
expects canola will be hauled south directly to crushing plants
in northern Mexico. He said using rail service through the U.S.
to Mexico will be much more efficient than hauling it by train
from Saskatchewan to Vancouver, then loading it onto ships
travelling down the west coast, offloading it at a Mexican port
and hauling it inland to a crushing plant.
He expects Northgate to be sourcing crop commodities
from about a 150-kilometre radius in southern Saskatchewan
and into Manitoba.
“Within that zone, we estimate farmers produce about 180
million bushels of wheat, about 60 million bushels of oats, and
another 180 million bushels of canola and other commodities,”
said Vanasek. “I don’t think we will have trouble sourcing the
commodities we need.”
The concept of developing this north–south rail link between
western Canadian production and U.S. markets is actually
credited to a former executive of hedge fund management
company Whitebox Advisors. Vanasek said that an executive
of Whitebox began researching rail links between Canada and
the U.S. back in 2008 in anticipation of the end of the Canadian
Wheat Board monopoly.
“He actually drove the border between Canada and the
U.S. looking for any crossing opportunities,” said Vanasek.
Northgate is a small community divided by the Canada/U.S.
border.
BNSF has long operated the 129-kilometre branch line
between Northgate and Minot, North Dakota. As this Ceres
project was coming on line, the railway undertook a major
$40-million upgrade of the branch line to handle the increased
traffic with product from Saskatchewan, and also to better serve
its many existing customers along the line.
Winter
2015
grainswest.com
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BIRD’S EYE VIEW:
This aerial photo shows the layout of the
Ceres Global Ag rail terminal at Northgate, SK.