A Canexus terminal that will transfer oil piped in to train cars near Bruderheim, Alta,. Oct. 29, 2013.IAN JACKSON/The New York Times
Terminal operator Canexus Corp. said it has "significantly" cut jobs at its Calgary head office as well as at its loading facility in northeastern Alberta, as sinking crude prices slash demand for crude-by-rail services.
A spokeswoman for Calgary-based Canexus said the layoffs amount to fewer than 50 people, or 16 per cent of the company's staff. The company said on Monday that it expected to generate savings of between $5-million and $6-million per year, excluding severance costs.
The moves reflect, in part, falling demand for shipping crude by rail from Alberta, as sharply lower oil prices erode profit from the once-booming mode of transport.
In recent months, some companies have scaled back shipments of heavy crude between Alberta and the U.S. Gulf Coast, saying the trade is uneconomic. Canadian Pacific Railway Ltd. has also cut the number of tank cars it expects to move on North American railways this year to 140,000, from 200,000 previously.
Canexus's Bruderheim terminal northeast of Edmonton was designed to handle 70,000 barrels a day. But the facility has struggled to reach full capacity.
So far this year, the terminal has handled five unit trains of oil on a "spot" basis through to the end of March, the company said. It has contracts to move another 5.5 unit trains per week beginning in the third quarter, roughly half the targeted activity of 10.5 unit trains a week. In a unit train, as many as 120 railcars travel from the same origin to the same destination.
Canexus this month booked a non-cash impairment of $58-million on the facility, citing lower-than-expected operating profits and higher construction costs of roughly $356-million. The company reported a loss in the fourth-quarter of about $230-million.
Efforts to sell the Bruderheim terminal have stalled amid oil's drop, the company said.