Marketing Strategy

Connecting to Markets

MEG Energy has an active role in connecting our growing production to market demand via the Access Pipeline System.

Access Pipeline connects MEG’s Christina Lake Project to an upgrading, refining and transportation hub in the Edmonton, Alberta area. From the Edmonton hub, we are able to connect our northern Alberta production base to current and emerging markets in North America and beyond.

marketing_access_diagramAt the same time as diluted bitumen is moved to customers on the Access Pipeline, a smaller pipe running in the opposite direction from the Edmonton hub to our Christina Lake facility helps ensure a reliable supply of diluent for blending into our products.

On February 8, 2018, MEG announced that it had entered into an agreement for the sale of MEG’s 50% interest in the Access Pipeline and its 100% interest in the Stonefell Terminal for cash and other consideration of C$1.61 billion. The transaction is expected to close in the first quarter of 2018, subject to regulatory approvals and customary closing conditions. There are no financing or other non-customary conditions related to the transaction.

As part of the transaction, MEG entered into a long-term Transportation Services Agreement  (TSA) dedicating MEG’s Christina Lake production and condensate transport to Access Pipeline for an initial term of 30 years. The TSA has an incentive toll structure where the tolls on additional barrels step down as incremental production is brought onstream. The transaction also includes a Stonefell Lease Agreement which is a 30-year arrangement that secures MEG’s exclusive use of 100% of the Stonefell Terminal for its blend and condensate volumes.

Building on this flexible “Hub and Spoke” strategy, the 900,000 barrel Stonefell storage facility is strategically located near the southern end of the Access Pipeline and is connected to a third party rail‐loading terminal near Bruderheim, Alberta. Stonefell adds significant value by:

  • Allowing MEG to blend products to improve the quality and price realization of our exports
  • Mitigating the impacts of periodic pipeline restrictions, which can temporarily distort market prices
  • Providing the opportunity to acquire and store diluent when market conditions are favourable

Together, the flexibility and connections to multiple markets provided by Access and Stonefell ensure our future transportation and storage needs are met, and improve our ability to optimize the value of every barrel MEG produces.