Savage Companies and Kansas City Southern have entered into a joint development agreement as the companies look to take advantage of development of the Bakken Formation. Savage intends to build, own, and operate a large multi-user rail terminal in Port Arthur, Texas, on property owned by The Kansas City Southern Railway Company.
The new Port Arthur Crude Terminal will be served by KCS and will be designed to bring unit train rail service hauling Bakken Formation crude oil, as well as other formation crude supplies, to the Gulf Coast for distribution to pipeline or refining consumers in Texas. The 480-acre site on which the terminal will be built is adjacent to the railroad's multi-million-ton capacity Pabtex coal and coke export terminal, which is operated by Savage.
"We are pleased to grow and broaden our relationship with KCS, and excited to expand our services to provide a destination crude-by-rail terminal on the US Gulf Coast," said Allen B. Alexander, Savage's CEO and chairman. "All of us at Savage are committed to serving this important industry by designing and operating critical touchpoints of the crude oil supply chain."
Savage has begun first level engineering, design, and permitting studies and expects construction to begin later this year and be completed by the second quarter of 2012.
"We believe the Port Arthur refinery complex and the readily accessible storage and distribution infrastructure in the area make this site an attractive destination for North American crude production. Savage is a natural partner for us given our existing arrangement at the Pabtex facility and Savage's expertise and commitment to the refining industry," said David L. Starling, KCS president and CEO.
Plans call for Savage and KCS to work with other railroads in securing joint unit train service design for the terminal. The two companies are also exploring the potential of receiving other products at the terminal, including certain refined products in concert with the railroad's Mexican gateway. Savage also will immediately begin discussions with potential customers and subscribers.