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Northgate project really opens U.S. market

There is an interesting grain handling and export project about to begin shipping wheat and canola from Saskatchewan and Manitoba into the U.S. this fall.

At the community of Northgate in southeast Sask., a Canadian company with U.S. interests is developing a rail terminal to buy

The shaded diagram on the left shows the layout of the Northgate properly, while the map on the right shows  how Northgate links to BNSF rail in the U.S.

The shaded diagram on the left shows the layout of the Northgate property, while the map on the right shows how Northgate links to BNSF rail in the U.S.

and transport grain and oilseeds south into U.S. markets on one rail loading facility, and on another loop track it will be shipping crude oil and liquefied natural gas products produced in southern Saskatchewan to U.S. refiners. Northgate is near the Manitoba border and just north of North Dakota.

Overall, the project owned by Ceres Global Ag Corp., headquartered in Toronto, represents an $80 to $90 million investment. Officially referred to as the Northgate Commodity Logistics Hub, the project is making use of a long abandoned railway right-of-way to carry Canadian commodities to U.S. markets.

 

Rail service from Northgate into U.S. markets is provided by BNSF (Burlington Northern Santa Fe) Railroad, which spent another $40 million building a spur line from its U.S. mainline to Northgate. “We view ourselves as a regional operation,” say Pat Bracken, president and CEO of Ceres Global, who is based in Minnesota. Bracken is a former executive with Cargill, who spent 32 years with that company involved mainly with the movement of commodities at the international level. He was lured out of retirement to join Ceres Global in developing the Northgate project. He started work with Ceres in September.

Jim Vanasek, with VN Capital Management in New York, who’s company is a major shareholder in Ceres Global, says this fall, Northgate will begin by shipping 72 rail cars per week of southern Saskatchewan, and southern Manitoba commodities to U.S. markets.

Northgate has grain buyers on the ground who will be sourcing commodities from farmers within a 150 kilometre radius trading area. Wheat, barley, durum and canola will be trucked to the Northgate transloading facility, loaded onto railcars and them shipped to U.S. destinations. Transloading means the facility this fall doesn’t have any storage capacity, so as a truck empties into a hopper, the grain goes directly into a rail car.

That’s just to get the facility operating this year. Plans also call for the construction of a 2.2 million bushel concrete and steel grain handling facility that should be completed by 2016. One other important link in the whole project is that Ceres also owns Riverland Ag, which is a collection of 10 grain storage and handling assets in Minnesota, New York, Wisconsin and Port Colborne, Ontario. Riverland also manages two elevators in Wyoming. So from the Northgate facility grain could move into the Riverland system, or could be railed to any other U.S. buyer.

Vanasek says with their commitment from BNSF rail the Northgate facility will be able to move commodity without interruption, unlike the rail bottleneck Canadian farmers experienced last year. “From Northgate commodities will go south and then either east into ports such as Duluth Minnesota or they can go west to ports such as Seattle,” says Vanasek. “Canola on the other hand will be destined to crushing plants in Mexico. Rather than being hauled off the Canadian prairies to Vancouver and then loaded on a boat for Mexico and then hauled inland, BNSF will just rail canola directly south to crushing plants in Mexico — it will be a much more efficient connection to markets.”

As the permanent grain handling system comes on line later in 2015 with completion in 2016, Northgate will step up shipments to handle two shuttle trains (110 cars each) per week. A shuttle train can be loaded within 10 to 15 hours. With two shuttle trains running the company expects to handle about 850,000 bushels of commodity per week.

“We have buyers on the ground now, we are in business,” says Vanasek.

Aside from the rail loop and terminal that will be handling grains and oilseeds, the second rail loop at Northgate is designed to handle crude oil and liquefied natural gas products for shipment to the U.S. market. It is a diversification plan by the company. This fall Northgate will be able to move about 15,000 barrels per day of energy products, and will increase that to about 60,000 barrels per day by 2016 once permanent storage facilities are in place.

Along with being a terminal shipping grains and oilseeds out of the southern Prairies, Northgate will also be bringing bulk commodities into its 1,500 acre site. The terminal may carry products such as frac sand for the oil and gas industry, fertilizer for farmers, dry cement for the construction industry.

Lee Hart is a field editor for Grainews in Calgary, Contact him at 403-592-1964 or by email at [email protected]  

About the author

Field Editor

Lee Hart

Lee Hart is editor of Cattleman’s Corner based in Calgary.

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