Canexus (TSE:CUS) jumped on Tuesday as the chemical maker said it will now resume construction at its rail hub, and will proceed to tie in its Cold Lake pipeline system into the MEG Energy pipeline. The news follows a favourable court decision for Canexus in its dispute with MEG over a pipeline construction agreement.
Construction is expected to begin as early as today, Canexus said in its statement late Monday, and is anticipated to last about two weeks. The end result will be the commissioning and start up of the pipeline system for Cold Lake Blend product delivery to its North American Terminal Operations (NATO) unit train facility in Bruderheim, Alberta.
"NATO is a state-of-the-art, strategically located asset that provides our customers with a viable way to move their products to multiple markets," said president and chief executive Doug Wonnacott.
"Once the tie-in work is completed, we will resume loading unit trains and expect to ramp-up operations to our contracted capacity of six to seven unit trains per week.
"On September 5, 2014, we commenced commissioning the unit train loading rack and are loading oil into railcars from on-site tank storage," he added.
Canexus had completed the pipeline from Lamont Station to the connection point into the MEG Energy pipeline, and anticpated being able to meet its schedule of commissioning and start up prior to September 1. But MEG Energy in late August refused to permit Canexus to perform the coldtap/cut work into the MEG pipeline to tie in the Cold Lake system.
In a statement released last week, Canexus said that MEG had "no legal justification for its refusal" and was seeking to enforce the terms and provisions of its pipeline agreement to allow it to proceed.
Canexus produces sodium chlorate and chlor-alkali products largely for the pulp and paper and water treatment industries. It has four plants in Canada and two at one site in Brazil.
Shares of the company surged 11.4 percent to C$4.99 in Toronto on Tuesday, paring year-to-date losses to slightly over 30 percent.