Canadian oil storage and transport company Gibson Energy Inc said on Monday it is building 900,000 barrels of crude oil storage at its terminal in Hardisty, Alberta, after receiving sufficient support from shippers.
The company will build a 500,000 barrel tank backed by a long-term contract with Teck Resources Ltd, a partner in the Fort Hills oil sands project and a new customer for Gibson Energy, and another 400,000 tank.
The new storage is expected to be in service by mid-2017.
RBC Capital Markets strategist Robert Kwan said against the backdrop of weak benchmark crude prices, Gibson Energy's ability to sign long-term contracts with customers to underpin of new storage should be viewed as a positive.
Hardisty is a major marketing and transportation hub for oil sands crude in Alberta, with connections to the Enbridge Inc Mainline system, TransCanada Corp's Keystone pipeline and crude-by-rail loading facilities.
Since 2012 Gibson Energy has been expanding its Hardisty storage terminal by adding nine new tanks that will take total capacity at the facility to 8 million barrels.
Four tanks totalling 1.7 million barrels of extra storage capacity are already commissioned and a further five tanks, including the two announced on Monday, will add another 2 million barrels of capacity.
"Despite today's depressed oil price environment, a robust growth profile remains in place for oil sands related production volumes," said Rick Wise, Gibson Energy's Chief Operating Officer.
The Fort Hills project, in which Teck has a 20 percent share alongside operator Suncor Energy Inc and Total's Canadian unit, is expected to produce first oil in the fourth quarter of 2017 and eventually reach capacity of 180,000 barrels per day.
Suncor and partners have maintained spending on the Fort Hills project despite global oil prices dropping by more than half since last June.
Gibson Energy shares were last up 10 Canadian cents on the Toronto Stock Exchange at C$27.08.
(Reporting by Nia Williams Editing by W Simon)