US Development Group, LLC (through a wholly-owned affiliate, collectively USD) and USD Partners LP (NYSE:USDP) (the “Partnership”) announced the diluent recovery unit (DRU) has been declared fully operational and the shipment of DRUbit™ by Rail™ (DBR™) has commenced.
The DRU is located at the Hardisty Energy Terminal (HET) near Hardisty, Alberta and is a 50%/50% joint venture between USD and Gibson Energy Inc. (Gibson). HET is located adjacent to USD Partners’ existing Hardisty Rail Terminal, which is the origination terminal for transloading the DRUbit™ onto railcars for shipment. The current destination terminal for the DRUbit™ is the USD-owned and operated Port Arthur Terminal in Port Arthur, Texas (PAT). This DBR network is highly scalable and is well-positioned for future commercial expansions. USD and Gibson continue to pursue commercial discussions with current and potential producer and refiner customers to secure additional long-term agreements to support future expansions at both the DRU and the PAT.
In association with the initial commencement of operations at the DRU in August 2021, approximately 32% of the Hardisty Terminal’s capacity was extended beyond 2030 pursuant to long-term, multi-year renewals at the Hardisty Terminal executed with a subsidiary of ConocoPhillips.
USD’s patented DRU technology separates the diluent that has been added to the raw bitumen in the production process, which meets two important market needs. It creates DRUbit™, a proprietary heavy Canadian crude oil or bitumen that ships by rail and does not meet any of the defined categories of hazardous materials by U.S. DOT Hazardous Materials regulations and Canada’s Transport of Dangerous Goods regulations, creating safety and environmental benefits. Additionally, it returns the recovered diluent to ConocoPhillips at HET for reuse in the Western Canadian market, which reduces delivered costs for diluent. The DBR network provides meaningful safety, economic and environmental benefits relative to conventional crude by rail.
The DRU at HET is operating at or above its nameplate capacity of 50,000 barrels per day of inlet bitumen blend, which the DRU separates into DRUbit™ and diluent. Transporting DRUbit™ by Rail™ is projected to reduce carbon emissions nearly 20% relative to dilbit by rail alternatives and approximately 30% compared to dilbit by pipeline alternatives.(1)
