Crude oil terminal shutdown ‘big blow’ to town

About 25 people are out of work after an oil transportation company shuttered a brand-new rail terminal near Kerrobert earlier this month, according to the town’s mayor.

“Twenty-five jobs is a big blow for our community . … Their families, it’ll affect our school, it’ll affect everything,” Erhard Poggemiller said Monday, noting that he learned of the terminal’s closure from employees who had been laid off.

Poggemiller said the company has not contacted his office or the municipal council about its intentions. He said it’s not clear if the rail terminal will be shut down temporarily or permanently.

Twenty-five jobs is a big blow for our community ….

Plains Midstream Canada ULC commissioned its US$140 million rail terminal in November, and planned to use it to load U.S.-bound trains with crude oil extracted from the surrounding area.

In early May, the company told the provincial government it planned to close the facility, citing weak oil prices eroding the need for rail transportation out of the province, according to the assistant deputy minister of the Ministry of Economy.

“Simply, they’ve told us that they’ll shut that down and that it’ll remain shut down until economics improve and oil production is back up again to a point where the need for rail transport is once again required,” Ed Dancsok said.

The Calgary company — a subsidiary of the U.S. firm Plains All American Pipeline — told the government about 15 jobs would be shed immediately, while others would likely remain in place until the shutdown is complete, Dancsok said.

Plains Midstream did not respond to requests for comment.

The Plains Midstream Kerrobert terminal is one of about six similar operations scattered across the province, and the first to close in response to weak oil prices, Dancsok said.

Oil production in Saskatchewan fell about 5.5 per cent in 2015 and is expected to decline five per cent this year, so there is a concern that other rail terminals will close, but the long-term trend for oil is upward, he added.

Located in west-central Saskatchewan, Kerrobert is home to about 1,200 people.

The promise of jobs at Plains Midstream’s terminal attracted people from other towns and cities, and many bought properties. Now, they’re selling, Poggemiller said. “All of a sudden, I notice a lot of real estate for sale again — and when I get checking around, it’s to do with the employees from Plains.”