All right. Well, good morning, everyone, and welcome to the 2019 Gibson Energy Investor Day. For those of you in the room, welcome, and thank you for joining us. We are also webcasting our presentation today, so thanks also to those joining us over the webcast. My name is Mark Chyc-Cies, and I'm the Vice President of Strategy, Planning, and Investor Relations at Gibson Energy. To introduce the speakers up here today, we have Steve Spaulding, President and Chief Executive Officer, Sean Brown, Senior Vice President and Chief Financial Officer, Mike Lindsay, Senior Vice President, Operations and Engineering, Doug Atkins, Vice President, Terminals, and Orin Atkins, Vice President, Business Development. Let us take a moment, as we would in the field, to open this meeting by considering our safety.
In the case of an emergency or alarm, I would ask that you exit through the doors on your right, proceed to the left, and then quickly to the right through the elevator banks. On both sides, you can access stairs behind those elevators. I would let you know that there are no tests scheduled for today. Bathrooms are, again, outside the doors to your left down the hall about halfway down on the left. We have a lot of exciting things to talk about today. Shortly, I will turn the podium over to Steve, who will speak about the significant progress we have made since our last investor day and what our future opportunities look like.
After Steve, in responding to some of the questions we get while we're on the road about our Hardisty and Edmonton terminals, Doug will discuss why these terminals are such a critical piece of infrastructure in Western Canada, Gibson Energy's competitive advantages at those terminals, as well as an outlook for that part of the business. Following the commercial perspective from Doug, Mike is going to speak to our operational capabilities, including a virtual tour of Hardisty with the help of a drone video we recorded a couple of weeks ago. I hope you particularly enjoy that part of the presentation. After that, we'll have a 15-minute break. Following that break, Orin will speak to our U.S. position in terms of where we are in the U.S. and where we're headed. The last section, we'll see Sean discuss our financial position and outlook.
We had some very good news on that front recently with DBRS initiating an investment-grade credit rating of BBB (low) yesterday with a stable trend on Gibson Energy. At the end of the session, we will have a formal Q&A, so I would ask that you keep all your questions to the end. Lastly, before handing it over to Steve, I would very quickly remind you that some of the statements we are making today are forward-looking or refer to non-GAAP measures. I would invite you to review the advisory at the end of the presentation at your leisure. With that, let me turn it over to Steve Spaulding.
Thank you, Mark. Good morning, everyone. Thank you for joining us. We're really excited about the future of Gibson Energy. On my left here today, speaking again, is Mike, Sean, and myself. You have a special treat today in that you have our U.S. lead and our Canadian lead in commercial and business development. They say they're not related, but I call them the Atkins cousins anyway. They'll be speaking later. They're a real treat because these are the guys getting it done. These are the guys that are developing the opportunities. Them and their teams are negotiating the contracts and driving across the finish line to really drive that infrastructure development for Gibson Energy. Also in the crowd, we have our chairman, Mr. Jim Estey, and we also have our extended leadership team.
Most of them are in the back, at the break, make sure you take some time to meet with them, or even after the presentation, or stay for lunch and get to talk to our extended leadership team. Thank you. Really, before we really get started, what I wanted to do is just ground you on what Gibson Energy is, and this is the Gibson Energy businesses. Right dead center is the Hardisty Terminal. The Hardisty Terminal is 10 million barrels of storage. We have over 2.5 million barrels under construction, and over 1 million barrels a day flow through Gibson. About one in every four barrels that is produced in Canada flows through our Hardisty Terminal. If you look at our Edmonton Terminal and our Hardisty Terminal, they make up three-quarters of our long-term cash flows.
Complementing that is our Moose Jaw facility, a growing U.S. platform, and our marketing organization that really optimizes around all these assets. Our strategy for 2019 remains consistent with last year. There are significant opportunities to continue to grow our Canadian terminals, and we expect to sanction 1 million to 2 million barrels of tankage or 2 to 4 tanks a year on a run rate basis. Additionally, we are actively growing a U.S. platform and with the expansion of the Pyote System and the connection into Wink. Last year, we invested CAD 300 million. This year, we already have CAD 250 million sanctioned, and we believe we'll sanction more throughout the year. Perhaps more importantly than how much we sanction are the risk-adjusted returns of these projects. Gibson Energy is interested in value creation. We expect our projects to realize multiples of 5 to 7 times.
These projects will provide high-quality cash flows over a long period of time. These high-return capital investments are going to drive per-share growth. That's really what it's about. It's creating value on a per-share basis. Gibson will continue to be selective in any M&A. It's easier to create value at a smaller company with a focused strategy and quality assets. Our focus will be organic growth with attractive returns. The other part of driving that per-share growth is making sure we maintain a strong balance sheet. We're in a great position with our current projects, being fully funded with a cushion and no need for external equity or adding leverage above our target range. Given our focus on balance sheet and the quality and stability of our cash flows, we were pleased to receive our first investment-grade rating. Sean will provide more detail on becoming investment grade.
We believe it is another important milestone and further reinforces that dramatic transformation of Gibson Energy. Stability is important. As we think about underpinning and growing our dividend, we will endeavor to cover our dividend with infrastructure cash flows. At last year's Investor Day, we had a much smaller room. If you all remember, it was very cramped in here, right? At last year's Investor Day, we outlined a series of steps to execute our strategy. Our strategy was to sanction one to two tanks per year. In 2018, we exceeded our target and executed four tank contracts. This year, we've already contracted another tank. Last year's success, we shifted our outlook. We went to two to four per year on a run rate basis, and proved that Hardisty can grow even in the toughest of business environments. Beyond our terminal growth, we contracted and built the Viking Pipeline.
This is the first significant pipeline Gibson Energy has built in decades. With the extension of the Pyote gathering system into Wink, we have sanctioned nearly $100 million in the U.S. to build gathering and pipeline assets in the Permian Basin. These are the first real infrastructure Gibson has ever built in the United States. Moose Jaw had a great year last year with a large crack spread driven by that WCS-to-Brent diff. Additionally, we're expanding the facility from 18,000 barrels a day to 22, and expect to place that expansion into service in late June or early July. We focused our business on divesting our non-core assets. It takes time to sell these businesses. With the expected sale of Canadian truck transportation, we will have completed the divestitures with the proceeds right down the middle of our target range.
Last year, our leverage was four times, and our payout was around 100%. Today, we're at 2.3 times with a 67% payout ratio, both below our long-term targets. We cleaned up our balance sheet and fully funded an accelerated capital program of CAD 500 million-CAD 550 million over 2018 and 2019, all with attractive returns. We accomplished this by delivering on our asset sales, continuing to grow our storage and pipeline cash flows, improving our Moose Jaw earnings, and in outside earnings from our marketing segment. As you can see by all the check marks, we executed on our strategy and exceeded our targets, and we're confident we will continue to grow oil infrastructure both inside and outside the terminal. Gibson today is a very different company. We're a company focused on our terminals and pipelines and positioned for long-term growth, and believe the market is starting to take notice.
Since last year's Investor Day, we've been the top-performing company in our peer group. We appreciate all the different ways to evaluate a company, but the most important to shareholders is returns. To better align ourselves with our shareholders, we're building a share ownership culture in Gibson Energy. We changed our compensation programs to drive ownership. We increased the company's match on ESOP and increased the amount of stock that our vice presidents and hires are required to own on an outright basis. We have a young and hungry leadership team, and Jim and I are always encouraging them to buy stock and to put their skin in the game. When someone joins management or directors, we encourage them to buy stock. Last year, really everybody up here on this stage, we bought stock, and we all had pretty good returns on it. So we're going to keep executing.
Because to think like an owner, you need to be an owner. For Gibson Energy to continue to drive those top-tier returns for all our owners, we need to keep growing our stable terminals and pipeline cash flows, remain fully funded, maintain a strong balance sheet, and execute. Looking forward, let's talk about how each of these assets fit in our strategy. Terminals are the core of Gibson Energy. Hardisty is our crown jewel, and I believe the top energy infrastructure asset in North America. Cash flows from our existing tankage is incredibly stable. They're from the take-or-pay fee-based contracts with predominantly investment-grade customers. The weighted average contract life remaining is nearly 10 years, meaning we have full visibility of what our cash flows will be over a long term.
Doug's up next, and he'll provide you more detail on our competitive position at Hardisty, and the visibility of continued growth. I believe the cash flows from the terminal business are best in class in the midstream sector. Terminals represent the best risk-adjusted rate of return in our portfolio, and our primary focus is continue to grow our terminal business. These storage projects have attractive returns, again, five to seven times build multiples. We remain confident in our ability to deploy capital in these terminals. Gibson plans to add more tankage at Edmonton over the next five years. We can expand the tankage 2 million barrels, which is double what the existing tankage is. Given the location near the two refineries in Edmonton, tankage can be built to support the refineries in either crude oil supply or refined products takeaway.
As a result, growth at Edmonton is not predicated around new oil sands growth or the Trans Mountain Pipeline expansion. Outside the fence of the Canadian terminals, we have the Moose Jaw facility. As you recall, last year's earnings at Moose Jaw, we outperformed. We've been very successful in several initiatives to increase the long-term profitability of the facility. Through a focus on operational excellence, we've been able to improve run times and cut operating and maintenance capital costs. We executed tolling agreements, which changed our product pricing from a WCS benchmarks to a Brent price. This contracting strategy has improved our long-term margin projections at the facility. We are also in the process of expanding the facility, as I said earlier. Depending on the differentials, we expect that to realize one to three times EBITDA multiples on that project.
Moose Jaw remains a meaningful part of our cash flows, and we understand its long-term value. We like the asset in our portfolio, and we're comfortable with some variability in our earnings. Turning to the Canadian pipelines. Gibson Energy has about 500 km of gathering pipelines around Hardisty. The Viking Pipeline was an expansion of this gathering system. Volumes on Viking have been above our projections, and as producers expand their production, we have low-cost, high-return alternatives to expand its capacity to meet their demands. We will continue to pursue other pipelines in Canada. We still like that emerging East Duvernay play and continue to look for opportunities to provide producers infrastructure to maximize their returns. Last year's announcement on the expansion of the Pyote gathering system and connection into the emerging Wink hub demonstrated Gibson's ability to build oil pipeline, oil gathering, and pipeline assets in the Permian Basin.
We've executed on the core agreement to build a platform for continued growth. Our engineering and construction team are focused on executing on time and on budget. I have experience building midstream businesses in the basin, and I believe we have the people in place to be very successful in the Permian. I have absolute confidence in Orin and his team, and they're chasing several opportunities that we hope to announce over the next few months. The Pyote expansion into Wink is a great platform for continued growth in the basin. The system is very expandable, and there is an abundance of additional gathering opportunities, as most of the producers in the basin in this area are undedicated. The team is currently negotiating with numerous customers and potential partners to expand the Pyote system both east and west. That could triple the volumes on the current system.
Additionally, there's 3.5 million barrels of new egress pipelines being built to export crude from Wink to the Gulf Coast. We purchased 160 acres in a strategic location in Wink, near the origin point of these pipelines, and are currently negotiating with counterparties to build our first tankage in the U.S. We think with our experience at Hardisty, the team we have in place in the U.S., and the growing volumes on our Pyote system, we will be successful in building a terminal in Wink. With the gathering and terminaling opportunities available to us, we now believe Gibson will deploy CAD 50 million-CAD 100 million a year in oil pipelines and terminal assets in the Wink area. At this level of investment, our position in and around Wink has become a platform of sustainable growth. You may have noticed I used the word marketing versus wholesale today.
Going forward, we will refer to our wholesale segment as the marketing segment. The term marketing better reflects the team's activities. At Moose Jaw, the refined products team's responsibility is to acquire the most advantageous crude oil for the facility and to maximize the net back on the sales of the refined products. They pay the facility a fixed lease fee and own the profit loss across the terminal or facility. Even in the weakest of crack spreads, the team has posted a profit, and last year that was a record profit. The producer service team, both north and south of the border, purchases production at the lease from small producers, which provides them market access. They drive that production towards our terminals through our gathering systems and our injection stations. They are key to maximizing system throughputs and establishing relationships with producers to expand our gathering systems.
The asset optimization team drives liquidity across our assets, providing markets for producers and supply for our refiners. This team works with producer services, providing our customers the highest net back price. At the terminals, they're utilizing their downstream relationships to develop markets to our customers and to drive the development of additional tankage. The marketing team generated over CAD 200 million last year, of which the refined products team was the largest contributor. We believe the combined marketing team will provide CAD 60 million-CAD 80 million a year on a mid-cycle basis. We're happy with the outlook of each of our businesses. We believe the future continues to be bright for Gibson Energy. With the sanctioned capital we have, we're on track to deliver annualized per share distributive cash flow growth of 10% plus on our infrastructure business through 2020.
With earnings from our marketing business returning to more modest mid-cycle numbers, future oil storage and pipeline projects will drive that growth. Our projects will drive a steady increase in retained earnings. We've already sanctioned CAD 250 million in capital for 2019. We believe we'll sanction more projects throughout the year. On a mid-cycle target, it is CAD 200 million, and we continue to be selective in sanctioning projects. The midstream business is opportunity driven, and in the lean times, we believe we'll still be able to deliver at least CAD 100 million in capital. As we continue to deploy capital in oil terminals and pipeline projects, we'll continue to create incremental value for our Gibson shareholders. It's important to remain fully funded. To the extent we have surplus cash flows after funding capital, we'll pay down debt. Paying down debt effectively just parks that cash until it's needed on a project.
With our strong balance sheet and stable cash flows, today's dividend is rock solid. For Gibson Energy to consider raising the dividend, the increase will need to be underpinned solely by infrastructure earnings. If Gibson has outside earnings from variable marketing business and we have no identified capital in our commercial pipelines, we would favor a share buyback over a dividend increase to return capital to our shareholders. In summary, Gibson Energy is well-positioned. Our strategy for 2019 remains consistent with last year. We've been able to execute on all facets of our strategy. We've created a company focused on oil infrastructure, a business built around our Hardisty Terminal. Gibson Energy has a foundation of high-quality cash flows for the long term. Approximately 80% of our future cash flows will be from long-term, take-or-pay, stable fee-based contracts with investment-grade counterparties.
We're also growing our oil terminals and pipeline cash flows. We will spend more than a half a billion CAD in capital in 2018 and 2019, combined with attractive returns. We are confident in our platform and organizational capability to continue to grow. We will continue to maintain a strong financial position. The investment-grade rating we just received is reflective of discipline, quality of earnings, and a strong balance sheet. Both our payout and leverage are below our targets, and all sanctioned growth is fully funded. I'm very excited about the future of Gibson Energy. We've got a great team up here that'll walk you through the key parts of our business today. Let me turn it over to Doug, who will speak to the Canadian terminals. Doug?
Thanks a lot, Steve. As Steve mentioned, I'm Doug Atkins, Vice President of Terminals. I'm responsible for leading all the commercial aspects of our terminals business, including Edmonton and Hardisty, with a focus on scheduling, optimization, and mostly business development activities. With terminals being the core to Gibson today, I'm going to provide you with some additional color on the terminals landscape in Western Canada and share some reasons why we are confident we will continue to sanction two to four tanks per year on a run rate basis. Let's start with understanding the flows of Canadian crude and how that relates to tankage. Today, total production in Western Canada is approximately 4 million barrels per day. Of that, about three-quarters is from the oil sands.
With total refining capacity in the basin of approximately 700,000 barrels per day, Western Canada relies heavily on export capacity to clear crude from the basin. Most of the production today is exported to the U.S., where there's high demand for heavy crude to feed complex refineries. Hardisty and Edmonton play critical roles in exporting this crude oil. The Edmonton hub gathers light oil, condensate, heavy crude, and refined products for eventual delivery to one of four local refineries, Trans Mountain Pipeline, the Mainline, or rail to reach end markets. This also flows through Hardisty as well. In contrast to Edmonton, Hardisty is largely a heavy oil crude hub. Multiple feeders and other trunk lines gather crude grades into Hardisty, where terminal operators aggregate crude streams before injection into one of the export pipelines or onto rail cars.
A fundamental difference with tankage at Hardisty versus Edmonton is the lower proportion of breakout tankage provided by those export pipelines compared to tankage controlled by producers, refiners, or others. These storage assets also inject directly into these export pipelines without hitting operator tankage. In addition, Hardisty has much greater optionality access to end markets through the Mainline Keystone Express, as well as rail, making Hardisty the place you want to be to export crude. The main uses include operational, insurance, and revenue generating. On the operational side, 60 crude grades in Western Canada seems extreme, for some reason, every producer feels their crude grade is special, and Gibson's happy to segregate that crude in multiple tanks for those producers.
To maintain quality from production site to end market, pipelines batch one grade of crude oil at a time, driving the need for segregated storage to receive and deliver. With multiple pipelines in and out of Hardisty, all running at different batch schedules and on different rates, aggregation storage is required before batching into export pipes. The next is insurance. This could include upstream or downstream pipeline upsets, as well as constrained egress from a hub. Luckily for Canadian crude buyers and sellers, pipelines are easy to build, egress is almost never an issue. Let's just say there was an egress shortage or a downstream pipeline upset. Tankage allows for a parking location for crude that can't get to market. We call this concept residence time, some producers refer to this concept as insurance.
If you think about a producer with 40,000 barrels per day of production and an appetite for 10 days of residence time, this likely means they would look at securing a 500,000-barrel tank with approximately 400,000 barrels of usable space. This means they have 10 days of production time to figure out alternate transportation solutions, decide whether selling incremental production at the hub makes sense, likely at a steep discount, or plan for a turndown or worst case, a shut-in in production. At access to our terminals, we see customers take a view of approximately 10 days of residence time. The last we'll touch on is revenue. Having tankage allows users to make market calls on current and future pricing environments and look at generating market structure revenues. This type of use could be in conjunction with operational uses. However, you're trading off insurance for short-term revenue.
Where do tankage customers create value with their insurance? Take a producer looking to sell 800,000 barrels in a given month and pipeline apportionment of 50%. That means the space in the pipeline allocated to that producer is approximately 400,000 barrels. Assuming that producer has a 500,000-barrel tank with Gibson, they would have the option to direct those barrels into tankage instead of selling at a hub at likely a discounted price. If we assume that discount is USD 5 per barrel, that producer would save approximately $2 million in that given month by having the tankage. In addition to the market pricing upside, there is also substantial upside from the producer's ability to maintain production rates absent enough takeaway capacity at a hub.
When you look at the cost of tankage compared with the total cost to get a barrel to market, it is clearly good value for the insurance that it provides. Additionally, having residence time helps mitigate potential production shut-ins that far outweigh the cost of having tankage, especially for a Seg D producer. If you look at all the tankage in Alberta, you would likely get to around 65 million barrels of storage. We view this as approximately 30%-50% of this tankage being used to support pipeline operations. This tankage is operated by major pipelines to facilitate their operation and is not used as residence time. When compared to Hardisty, Edmonton has a much greater proportion of operational tankage to merchant tankage. The remainder of the storage market can be broken into three customer buckets, marketers or traders, the upstream producers, and downstream refiners.
This distinction is important because each customer views contracting tankage very differently, and their needs differ as well. From the pure marketers or traders, they typically look for the lowest cost tankage, the most flexibility, and are typically reluctant to enter long-term contracts. This is a tough bill for Gibson to fill. At the Gibson terminals, our typical customers are the upstream producers or the downstream refiners, who use tankage to support their assets on a very long-term basis. This supports the long-term contracts we need to underpin new tankage builds and also provides good line of sight to recontracting. In particular, the oil sands customers we are talking about have decades of production without the typical declines we see in conventional drilling. They need tankage for a very long time.
Our extensive connectivity allows us to offer each customer a unique service offering and allows that to fit their specific business needs, making a long-term partnership with Gibson valuable from both sides. For those at the investor day last year, you will recognize this slide. We have updated it for the last year or so, but the conclusion has not changed. We have built a very strong track record at Hardisty, and we are working hard to keep that going. In the last 10 years, we have basically built all the merchant tankage at Hardisty. While not shown on this slide, we have also managed to break into the Edmonton market as well. Most notably, the tankage we have sanctioned at Edmonton and Hardisty over the last three years has been under long-term contract in extremely challenging environments. This really speaks to the strength of our assets and our relationships with our customers.
Recall we talk about flexibility creating value. It's the connectivity to inbound and outbound pipelines that creates this flexibility. Our inbound connectivity allows us to access almost any crude grade in Western Canada. Our outbound connectivity allows us to access all outbound options at Hardisty. The full suite of connectivity provides us the ultimate flexibility for our tankage customers, also allows Gibson the opportunity to chase almost any buyer or seller of Canadian crude as a potential tank customer. Ultimately, connections and the resulting flexibility provide for a hub with great liquidity to buy and sell crude, driving the best pricing potential for exporting crude. The connectivity we offer at our terminal has been built over decades. We believe this position for a new competitor to come in and replicate is extremely difficult. We refer to this as our moat. There's really two reasons.
First, getting the commercial agreements into place to connect to many of these pipelines can be challenging. In order to build our existing position, we worked closely with our customers over many years to develop this connectivity. When it comes to connectivity, it's a valuable asset and can be extremely challenging to build connectivity to or from a competitor's facility who's actively in the merchant tank business as well. The second reason is these connections are expensive. The cost of a single connection can be as much as one or two tanks. As a result, you'd need to sanction a large number of tanks to get a project off the ground or spend substantial risk capital up front without certainty of future backstopping. If you go to Hardisty, you'll see there's a lot of land around to build tankage.
Many of our large competitors have held or currently do hold land in the area. They've failed to get into the Hardisty merchant tank market. Some of the other advantages we provide at Hardisty, our joint venture with USD provides Gibson the only access to the only unit train facility in Hardisty. This has recently been expanded to do three unit trains per day, offers customers at our Hardisty terminal another option for egress. This also provides the ability to contract for rail loading capacity and tankage with customers not connected to major egress pipelines. A few of the tanks we're building at the top of the hill today relate to the rail unit train facility, as well as other optionality. Another advantage we have is we're terminal and tankage focused. That really makes us aligned with our customers.
We don't have a preference what pipeline crude comes in or goes out on. If you're operating a major egress pipeline, that's likely going to be a bigger focus than the terminaling to get it into that pipeline. Another advantage we provide and the last we'll touch on, a lot of merchant terminals don't have this advantage, is our ability to offer marketing services to producers who can't necessarily take on assets by themselves. An example of this is our Bow River stream we manage at Hardisty, which is comprised of a number of smaller producers and other aggregators, which our marketing group manages on their behalf. The Gibson marketing team manages this stream to provide the best pricing possible for those producers. Talking about expansion. When you look at a map of Hardisty, it's no surprise that Gibson's facility is right in the heart of it.
As of today, 34 tanks in service with 10 million barrels of storage. There's four different segments with the terminals, the Top of the Hill Terminal being the latest development and furthest to the east on that map. All the tankage being built at the Top of the Hill is under long-term contract, take-or-pay agreements with high-quality counterparties, and we believe that each of these customers will realize great value from this leased tankage. In total, the four phases sanctioned to date will add 3.6 million barrels across eight tanks. We have room for two more 500,000-barrel tanks at the Top of the Hill, bringing the total build to 10 tanks and 4.6 million barrels. We expect to sanction the final two tanks at the Top of the Hill over the next year.
The Top of the Hill area will be the largest aggregate storage project Gibson has completed to date, which is impressive when you consider the market dynamics over the last three years. In terms of returns, as Steve mentioned, all this tankage is being built at 5-7 times EBITDA multiples. When we look for other areas for expansion, we have additional undeveloped land adjacent to the south of the Top of the Hill, which will provide decades of running room. We also have the ability to sanction two more tanks at the Hardisty West facility, which is a joint venture with a senior oil sands producer. As we near critical decision dates on Keystone XL, producers and refiners will need to adjust their market access solutions based on whatever that decision turns out to be.
We believe the market needs certainty around this project, and that would enable Gibson to offer long-term egress solutions to customers, including new tankage, whether it's to feed new pipeline space or rail commitments. Turning to Edmonton, it's obviously a much smaller footprint, but still a very attractive infrastructure asset. The Edmonton Terminal is adjacent to two of the legacy refineries in Edmonton. It's located by the Mainline, the Trans Mountain Pipeline, and also has access to CP and CN rail. These factors allow us to build our terminal out around crude oil or refined products. Like Hardisty, our focus at Edmonton is built around long-term take-or-pay contracts with high-quality counterparties. Real estate in Edmonton is extremely valuable and limited. Our remaining footprint allows us to add 2 million barrels of tankage.
The Trans Mountain proceeding would likely allow us to fill out that position, but we do believe there are other opportunities in the medium term to fill this out. We'll see what comes first. Why will Gibson continue to grow its terminals position? Look what's happening in the North American and crude oil global crude supply and demand picture. The simple takeaway is there's significant demand for Canadian heavy crude. One of the largest drivers in this shift in crude grades available globally is for the very complex refineries on the Gulf Coast. As declines in production and political instability have decreased the availability of Iranian, Venezuelan, and Mexican heavy crude grades, refiners on the Gulf Coast are looking to Canada to fill that heavy crude demand.
Western Canada has the third-largest proven reserves in the world, there's no shortage of oil sands projects that could be sanctioned at current global prices. With exporting heavy crude a necessity, we need incremental pipelines to be built in order for oil production to grow longer term. While we're very disappointed that the Line 3 replacement was delayed, we also don't think that Line 3 replacement alone solves the egress constraints and drives a new wave of oil sands projects. With curtailment by the Alberta government, a sizable existing call on rail, the volumes to fill Line 3 replacement are already on stream. While there's still no certainty, we do expect Keystone XL will be put into service in the early part of the next decade, we believe once there's certain visibility to that pipeline being built, we would see that next wave of oil sands projects sanctioned.
Based on our internal work, there are more than enough high-quality projects with well-capitalized owners to advance them, these would more than fill Keystone XL. If you think about what that means in terms of tankage, assuming 10 days of residence time, that would be a need for approximately 8 million barrels of storage, likely all at Hardisty, likely required by existing customers of Gibson. We also believe that Canada needs the Trans Mountain pipeline expansion, especially if for whatever reason, Keystone XL does not get built. While it's very hard to guess the timing of Trans Mountain, there is a scenario where timing works quite well for western Canada to handle production beyond Keystone XL and Line 3 being full.
If Trans Mountain were to go ahead, we would expect, given our location next to the origin of that pipe, that we would finish building out our Edmonton footprint if we hadn't done so already. In the interim, based on customer conversations, we do see additional demand for tankage for a number of different reasons. Flexibility tankage provides in the current environment is extremely valuable. As resolution to these egress constraints continues to be pushed further and further into the future, our existing customers are looking at adding residence time to their business today. In order to find egress out of the basin, many companies are placing more emphasis on their rail strategy. To effectively access the unit train facility at Hardisty, customers would require a tank at our terminal as well.
We've also seen downstream players interested in extending their integration further upstream to better access crude, particularly given volatile pricing and tight export constraints. Perhaps a bit surprisingly, there are companies in the basin that have a much longer planning horizon and are looking at adding tankage now for future projects. We do need egress to allow new oil sands projects to be built. Longer term, what's best for Gibson is that egress pipelines do get built, we believe that they will. Further delays probably mean an increasing reliance in the near to medium term on rail, which also requires tankage. As a result of our conversations with customers and our understanding of their future tankage needs, we're very comfortable in our ability to sanction 2 to 4 tanks per year on a run rate basis over the medium term.
To the extent egress projects keep being delayed, we might be at the lower end of that range, but there's still a need for tankage, even in this environment. As evidence of that, we've placed three tanks into service. We have five under construction and expect to sanction more through the balance of this year based on these commercial discussions. To summarize, perhaps the overarching point is that Hardisty Terminal and Edmonton Terminal are critical infrastructure for the movement of crude out of Western Canada. We have a very attractive offering at our Hardisty Terminal and believe this flexibility is best in class. It's taken decades to build this position, and it's likely cost-prohibitive and very difficult for a new competitor to replicate. Our business model remains focused around long-term customers, resulting in very stable cash flows from these assets.
Lastly, we remain confident with the current and future market fundamentals, we will be able to sanction two to four tanks per year on a run rate basis. That'll turn it over to Mike, who will walk through our operational capabilities and a virtual tour of Hardisty.
Great. Thanks a lot, Doug. Again, I'm Mike Lindsay, Senior Vice President of Operations and Engineering. I'm responsible for Gibson Energy's Canadian operations, our capital project and development and execution, as well as our environment, health, and safety teams. I've been with Gibson for about four years, and my background's been on the projects and operations side of oil and gas, most recently at a senior oil sands producer that's also one of Gibson Energy's key customers. For the majority of my time up here, we're going to go through a quick virtual tour of Hardisty without the need to travel to a fairly rural part of Alberta. It may not be exactly like the real thing, but it's amazing what you can do with technology. We'll also cover three specific areas that allow us to turn what Doug talked about into reality each and every day.
These are Gibson Energy's focus on environment, health, and safety, on our operations, and on our project execution. It's sometimes taken for granted, but for Gibson to deliver safe, reliable operations day in, day out for our customers, our people, and really all of our stakeholders, a significant amount of operational management and technical capability is required. Now, as important as what you do is how you do it. In terms of protecting people, the environment, and investing in the communities that we operate in. In 2018, our total recordable incident frequency, or TRIF, came in at 1.14, following a steady improvement over the last few years. These results were comparable to other liquids terminal operators that we benchmark ourselves against.
Additionally, since TRIF includes our trucking and environmental services businesses in Canada, businesses that simply have higher exposure hours, being in line with the terminals benchmark is really quite the achievement. As we complete the exit of our non-core businesses, we would expect our TRIF and other safety metrics to improve further. This will be helpful as we've set a very ambitious goal for ourselves to achieve top quartile performance on our safety stats over the next three years. Which means in terms of TRIF, that we would be defining that as between 0.4 and 0.6. That means we need to cut our incident frequency in half. I believe that's a very achievable goal given the focus management team and board have in this area. Changes to our safety targets are also part of a broader, renewed focus on operational management.
Our operational management system, or OMS, will not only benefit our safety outcomes, it'll further enhance our operational excellence and our business performance across the organization. Our operational and safety performance is not only important to us, it's important to our customers. The commercial group might want to take all the credit for our growth, but for Gibson Energy, our reputation as a good, safe operator plays a key role in customer deliberations. We believe this is a key differentiator for us in the market, and we continue to strive to get better. In addition to being a responsible and reliable operator, we've become very capable in terms of our capital project management and execution, and we continue to put projects and service on or ahead of schedule or on or below budget. It's important to remember that most of our contracts, there's no pass-through of cost to the customers.
If we're over budget, it impacts our economics. Being under budget because we've been too conservative in our cost estimates is not helpful either. If we overestimate our costs, it raises the hurdle for the commercial team, and over time, we would lose out on good opportunities. For that reason, we've worked very hard to develop the competency in this space and strive to give a commercial team the most effective and competitive project scopes and cost estimates that we can deliver. Once in execution, we focus on taking a disciplined approach and making sure that we manage risks. This is another area that we've worked hard to develop, and I'm really proud of the work that the team has achieved. As you can see, our track record has been very strong.
Most recently, we placed phase 1 of the Top of the Hill project into service about three months early. We also placed the Viking Pipeline into service about three months early. Both of these projects were delivered on budget, which is exactly where we want them to be. The projects we have in progress are also tracking very well. Both phase 2 and phase 3 at the Top of the Hill are ahead of schedule, and we've also been able to accelerate our outlook for the Moose Jaw expansion to be in service at the end of Q2. In the U.S., our build-out of the Pyote East System and building that into the Wink Hub are also tracking very well.
Final timing of that will be dependent on pipelines out of the Wink area, and when they're put into place, but I'll let Orin go into that in a little bit more detail. As you can see, our ability to operate is very important to us. In the past, we've not talked about it very much, but I want investors and analysts to know Gibson is a company that can build and operate. This is one of the reasons that we've been so successful in securing virtually all of the tankage builds in Hardisty over the last 10 years. It's a very important part of our business energy infrastructure, and it's a priority to this management team.
In a second, we're going to go on this virtual tour of Hardisty, but before we do that, I want to highlight something that I personally want to leave you with, as I strongly believe it distinguishes us from our competition. Every day my focus, and that of my team, is on the efficient and safe operation of our assets, including Hardisty. It's our technical and operational ability, and attention to detail in customer service, that sets us apart from our competition. While the scale of the infrastructure, the tanks, the pipes, the valves, are all very impressive, it's the way we operate that distinguishes us as a service provider in the eyes of our customers. For example, oil coming in from the oil sands doesn't necessarily have a place to go when it lands in Hardisty.
This is where Gibson can be a true service provider, leveraging our relationships, physical connections, the flexibility of the terminal to maximize the value of crude for our customers, minimize the disruption to upstream operations, and optimize the efficiency of Canada's pipeline network. With that, let's go on our virtual tour.
Welcome to the Gibson Hardisty Terminal, which for over 60 years has been a key piece of energy infrastructure in Western Canada. Let's take a few minutes to explore the terminal and take a closer look at what goes into building and operating energy infrastructure of this scale. We are currently located above the top of the hill build-out, looking west. As we continue to rise, we can see the Gibson Hardisty East Terminal right in front, and the Gibson Hardisty Terminal just behind that. Beyond, we can see tanks related to the largest egress pipeline out of Hardisty. Panning to the right to look north, we can see the origin of the second-largest egress pipeline, with the third-largest egress pipeline starting southwest of our current position. We are now looking at a bird's-eye view of the Gibson Hardisty East Terminal.
From a height of just over 100 meters, we can start to get an appreciation for the scale of these tanks. As we hover beside one of Gibson's 500,000-barrel tanks, what is really striking is the size of each one of these tanks and the overall size of the Hardisty facility. We can really get a sense of the scale of this infrastructure relative to one of Gibson's employees walking in the foreground. Another important factor to note is all the piping within the footprint, as that is the key to the level of service Gibson offers to customers at the terminal. With best-in-class connectivity to 11 inbound and eight outbound pipelines, the Gibson Hardisty Terminal can access any crude grade in Western Canada and all major pipelines in Hardisty.
As crude oil comes into Hardisty on one of the many inbound pipelines, it would then pass through the connection to that pipe and is routed through a series of valve matrices, such as this one, until it ultimately reaches the intended tank. When it's time for a batch of crude to head to market, it's this backbone that will deliver the crude into the right part of Hardisty. It's also the connectivity that allows Gibson to blend crude oil or NGLs on behalf of customers. Another distinguishing factor that sets Gibson apart from its competition is the company's technical and operational ability.
While it might seem that anyone can build and operate a tank, when we see the size, scale, and complexity involved in offering customers the flexibility to transport their product through a variety of methods, and the planning and execution required to manage throughput of over 1 million barrels per day in a safe, efficient, and environmentally responsible manner, the expertise required is clearly evident. What does 10 million barrels of storage in Hardisty look like? Gibson has a total of 34 tanks at four separate terminals. Most of the tanks would be between 300,000 and 500,000 barrels, with this tank being at the large end of that scale. Each 500,000-barrel tank is approximately 75 meters in diameter and about 30 meters tall, equivalent to a six-story building and covering the area of three professional hockey ice surfaces.
We are now looking down at the Gibson Hardisty East Terminal, comprised of nine tanks with a total capacity of 3.7 million barrels of storage, as well as eight kilometers of piping. Going back to the storage analogy, that would contain a professional hockey arena about four times. Now, looking to the east, we can see the top of the hill. We're going to fly over it in a second, but what is important to notice is the change in elevation. It is hard to see from a map, but it really is at the top of a hill nine stories high, and it's something that Gibson needed to consider as it engineered the build-out. Given the large increase in elevation from the center of the Hardisty operations, the crude requires pumping in order to be delivered up the hill.
We are now above the top of the hill, with a really good view of the various phases of tank construction. On the right, we can see phase 1, which was placed into service earlier this year. Above and to the left of phase 1, we can see the phase 2 tanks, where the walls are being built and both a floating roof and fixed roof will be placed on top. Just left of those tanks are two phase 3 tanks, where civil earthwork has been completed, the foundation has been poured, and the construction of the tanks has begun. You might be wondering why it takes 15 to 18 months to build a tank. A large part of that is winter. When the ground is hard, civil work cannot be completed, and it is challenging to pour foundations.
To the right of the foundations for the phase 3 tanks is where the phase 4 tank will be built, with room available for two more tanks, which will fill out the Top of the Hill footprint. Once Top of the Hill is complete, it will be the largest area of development for Gibson to date at 4.6 million barrels and 10 tanks. With Top of the Hill nearly built out, where will future tanks be built? As we look south, we can see 80 acres of unused land just south of Top of the Hill, which connects to an additional 160 acres further south of that. To put it simply, Gibson could more than double its current tankage footprint. Looking to the east from the Top of the Hill, you can see the HURC Rail Facility two miles in the distance.
Through an exclusive partnership with USD Group, Gibson's terminal is the only one at Hardisty that offers customers the ability to move Western Canada crude out by unit train. The facility was recently expanded to accommodate an additional train per day, increasing capacity to three unit trains, or about 180,000 barrels a day. As we conclude our tour, we have one last look across the landscape at Hardisty, with Gibson right at the center of it. As we have seen, the scale of this infrastructure is very impressive and requires significant technical expertise and operational ability to operate safely and efficiently. Touching about one in four barrels exported from Western Canada, Gibson's Hardisty Terminal really is a key part of Canada's crude oil infrastructure.
All right. Again, just amazing what you can do with technology today. I always really enjoy visiting our operations, so I'm really glad we could take you there. Hopefully, the tour has also helped convey some of the things that Doug and I have talked about on our position in Hardisty. Gibson really is at the heart of Hardisty. While we did not touch on all the intricacies of the facilities, we did get to see the valve matrices that drive our best-in-class connectivity, and that's key to our customers. Doug talked about how challenging it would be today to secure the agreements Gibson has in place. From a capital investment point of view, it would cost hundreds of millions of CAD for the piping and support infrastructure required and take years to complete that sort of build.
Both Doug and I touched on it, customer focus is very important. Whether it's from a commercial or operational perspective, we are focused on our customers. Over many decades, we believe we've built a strong track record with our customers, and that's allowed us to build strong relationships, collaborate, and develop effective offerings that are integral to their businesses. With that, thank you. I'll turn it back to Mark.
All right, thanks a lot, Mike. Hope everyone enjoyed the video. If not, I guess we could just have more slides next year for you. We're going to take a quick 15-minute break. When we return, we have two sections remaining. That would be for the U.S. and then our financial outlook. That would then let us take to Q&A. We'll take a quick 15-minute break. All right. We're going to get started shortly, so if everybody can importantly find their coffee and then their seat, we'll get rolling again here. Excellent. All right. Let's start back up again. I can tell you we're closer to the end than we are to the beginning, with two sections and then Q&A. With that, I would like to turn it over to Orin to speak on our strategy in the U.S. Orin Atkins.
Thank you, Mark. I am pleased to be here today to talk about the very exciting things that we are doing in the United States around our Wink and Pyote area. As a brief introduction, my name is Orin Atkins. I'm the Vice President of Business Development, and as Steve indicated, I'm responsible for all our commercial activities in the United States. Prior to this role, I'd worked at a large public U.S. infrastructure company in a commercial role, focused on the development of oil gathering infrastructure in the Permian Basin. Before that, I held various business development and marketing roles, developing infrastructure in the Barnett Shale and other U.S. onshore plays. I joined Gibson just about a year ago. Actually, it was right around the last Investor Day. As an American, I really didn't know too much about Gibson Energy before I started talking to Steve.
Now I'm happy to say with the presence that we are building around Pyote and Wink, I can tell you that all the producers in the area know who Gibson Energy is, and that Gibson Energy is a part of all the discussions on opportunities in those areas. While Steve talked about our broader strategy in the United States and how that fits into Gibson as a whole, to understand the details of where we are going in the U.S., it's probably best to start by understanding where we came from. When I joined Gibson, we really didn't have much of a U.S. presence, and we weren't in the U.S. infrastructure space. We had a trucking platform in most of the basins in the United States that were coupled with injection stations, and also a small gathering system in the Permian.
Right before I joined, Gibson had decided to divest its U.S. business, with the exception of the injection stations in the Permian and the SCOOP/STACK, and a small trucking fleet to complement them, which would serve as a platform of tools to build out our infrastructure business. In order to do that, as Steve said, the first step was hiring a team of experienced professionals in the U.S. I can tell you that to be successful in the Permian Basin, and likely any basin in the world, you need to have a local team with local relationships and an understanding of the local way of doing business. I'm very happy when Steve speaks to the confidence that he has in the U.S. team, because we really have made a number of changes to upgrade our human capital.
We've rebuilt our U.S. business development organization and have also hired an individual with extensive marketing and trading experience in the United States to run our marketing organization. We've also brought on a great operations and engineering lead who has years of experience constructing and operating oil gathering systems across the U.S., but most recently in the Permian Basin. George Graue's hanging out in the back. If you haven't met him yet, please do so. Today, we can confidently say that we have a top-tier U.S. team to execute on both the commercial and operational aspects of our strategy. We also needed to improve on our first purchasing and producer relationships. This capability is critical in growing an infrastructure business, particularly in the gathering space.
By its nature, the gathering and the trucking businesses are closely tied to producers' production, and the ability to provide pricing and liquidity to those producers is critical to those businesses. Marketing and trucking essentially can help you get your foot in the door, and from there, you can start to build out your relationship. Over time, that relationship can offer the potential to learn about a producer's future needs. When you are drilling wells that come on at 1,000 barrels per day, those needs quickly shift from needing a truck to being on a pipeline. We are working today with producers around our Pyote systems and our injection stations in the region, and we are in discussions to continue to expand those relationships and add new ones. All of these activities make us very comfortable that we are delivering on the goals from the last Investor Day.
With the infrastructure we are building at the Pyote East and the Wink Hub, we are confident that we will reach the $20 million in EBITDA or more by 2020. Our goal is obviously not to stop there, as we feel these activities have begun to build a platform in the United States, where we can continue to deploy capital to grow our infrastructure business and continue to increase the streams of long-term, stable cash flows that these types of investments provide. Let's go into a little bit more detail on how we're going to drive this growth, starting with our existing assets and sanctioned projects.
For those of you that are not familiar with this part of the world, our Pyote East system is located on the western edge of the Central Basin Platform, with the Midland Basin to the east and the Delaware Basin to the west. I'm sure you've probably heard of those basins, as they have outperformed their initial expectations and are likely some of the most prolific plays in the world. The Central Basin Platform offers similar multi-zone potential, and we are seeing horizontal development and drilling heat up in that basin as well. There's still a lot of opportunity in the infrastructure space around both of our Pyote systems.
There's a lot of acreage in this area that has not been dedicated, and the cost of getting into these opportunities is not the same as the multiples we've seen in other parts of the Permian, which are now in full development mode and very crowded. This is very important because we simply aren't willing to pay as much and take on the risk that some other players choose to take on. We are very excited about the development in the area and our position, and with about 3.5 million barrels a day of new takeaway capacity being built into Wink and expected to come online in the next 6 to 18 months, we expect the drilling in the area will continue to help fill up these new pipelines.
To put that into the context of Canadian oil and gas, total pipe egress out of Hardisty today is about 3.5 million barrels. Effectively, Wink is a new Hardisty. Right now in the Pyote area, our focus is to continue to execute on the development of Pyote East, as we announced last August. As you can see on the map, we have over 65,000 acres dedicated acreage, which is currently producing about 12,000 barrels per day, and with three rigs currently running on that acreage, is very much on track to meet or exceed the 2020 expectation of reaching 20,000 barrels per day. To give a little bit more color on what an opportunity like this looks like, when we entered into the agreement, there was an existing pipeline that was not in service, and the producer was trucking all their volumes.
As of the start of November, Gibson took on trucking all the volumes on the dedicated acreage, and we will continue to do so until volumes can get on pipe. Even then, there will still need to be some trucking as new pads come online before they are tied into the system. However, our focus here, to be clear, is infrastructure, and more specifically, bringing that existing pipeline system back into service and connecting it up into the Wink Hub. With our Pyote expansion opportunity, our intention is to build a 12-inch pipeline into the Wink Hub. With the ability to connect into several of these egress pipelines, providing our customers with optionality and a market egress solution. Today, our acquisition of right-of-way is nearly complete, and we don't foresee any issues as the State of Texas is still a jurisdiction that allows and welcomes pipelines.
Those are unfortunately becoming fewer and farther between. Construction will commence next month with our target being to bring the system into service just as egress out of the Wink area becomes available, as there's really no benefit in being there early. That's the growth we have sanctioned in this area today. As Steve Spaulding talked about, our intention is to create an infrastructure growth platform around our position in the Pyote and Wink area. For those of you that understand pipeline hydraulics and capacities, when I mentioned that we're building a 12-inch pipe into Wink, you might have thought, "Man, they're expecting a lot of production from that acreage." In reality, our strategy behind building a pipe that can carry 100,000 barrels per day is that the incremental cost to upsize that pipeline is small, but it allows you to have significant upside opportunities in the future.
With the relationships we are building, both through our first purchaser capability, our trucks, as well as our business development efforts, our goal is to start driving volumes onto our system, not just through direct well connects to our gathering systems, but also through connections to third-party gathering systems neighboring our own. This can take on several different forms. For instance, if there's an offsetting producer that has existing production going to another market, we may be able to win that business by offering them a better market at Wink, given the connectivity we're going to have there. If that producer is looking to grow, we could align ourselves with them and start building out a system on their behalf that connects into our trunk line into Wink.
Even if that acreage is already dedicated to another player, it might make sense for us to work together on a joint tariff for them to use our pipeline and connectivity for a fee. Over time, the idea is to spider web the system out and be able to access more and more production. In such a way that we have a clear line of sight of how we will make our returns when we invest our capital. The other part of our strategy around our Pyote assets and our aggregation of crude area is to be a part of the longer-term build-out of the Wink Hub.
As we build our pipeline into Wink, we have also been diligent in trying to secure as many connection agreements as possible to each of the pipelines that will take that 3.5 million barrels a day of crude out of Wink. While some companies are more commercial than others, right now, most of the pipeline operators want as much crude coming their way as possible so they can fill up their new downstream pipelines. As these pipes start to fill up over time, I would expect that their enthusiasm on new connectivity to wane. Similar to the discussion that Doug Atkins provided on how we built our flexibility at Hardisty, now is the time to secure those connections at Wink. Right now, the Wink hub really doesn't exist. Unlike the images that Mike Lindsay showed you, there aren't tanks as far as the eye can see.
It's really just empty space adjacent to a small West Texas town of Wink and some small legacy terminals. This is not a very densely populated part of the world. In fact, we recently purchased our 160 acres of land at what is a fairly nominal cost. Our intention over time is to build a Gibson Wink terminal. Of course, as Steve outlined in our strategy, our business is about long-term, stable cash flows. To build a Wink terminal, we're going to need to secure the contracts to underpin those builds. We do believe that we are very well-positioned. We are working to secure those connection agreements to provide us an advantage down the road, and we believe there's a first-mover advantage to build out at Wink.
Similar to Hardisty, we're independent, and that creates a competitive advantage in that we are aligned with the needs of our customers. Let's take a look at a map of our target area in the Permian Basin and get a bit more specific about those opportunities in that area. The important point I would make at the outset is that we are in active discussions across this map sheet for infrastructure investment opportunities. On the west side of the map, you see the future Wink Hub in Winkler County. We just talked about our intention to be part of the build-out of a terminal there. To help us do that, we want to access more barrels and build up our customer base as scale is important. Southeast of Wink is our Pyote East system, which will be connected into Wink by the end of the year.
To the east of the Pyote East system, there is significant undedicated acreage from producers in the Central Basin Platform. Our intention is to expand our gathering footprint to get some of those producers onto our pipeline into Wink. Southwest of Wink is the Pyote West system. There's been some consolidation in that area recently, which has changed the landscape a bit, but our intention remains to bring volumes in that area into our Pyote West system. Where previously we might have worked with the producer, we would now also look to partner with midstreamers who have dedications in that area. This would allow us to underpin the connection of the Pyote West system to our Pyote East system and into Wink. Throughout the area, you can also see our injection stations, which are located on several different egress pipelines.
We are using these stations in conjunction with our trucking and marketing business to build relationships throughout the Permian. For example, we currently have an injection station in Andrews County and have an active trucking and marketing activity in the area. Our goal would be to transition the producer's volumes from truck delivery onto a new gathering system. With five rigs currently running in that area, we know that there will be a need for gathering in the near future. Similar to our strategy at Pyote, if we were able to secure a relationship with one of the producers, that would underpin the construction of a backbone of a system with the intention of bringing adjacent producers on in the future. Longer term, there could also be the potential to consider tying these volumes back into Wink if there's producer support to do so.
Interestingly enough, between Andrews County and Wink, there's also a large amount of undedicated acreage that is seeing increased producer interest. There are definitely a lot of opportunities in the area, and Gibson is a part of all of those conversations. I've spent most of my time talking about what we are doing, but I wanted to finish today with a question that I understand the company gets from a lot of investors and analysts, which is: How does Gibson win in the Permian, given all the competition in the area? The most important thing is likely the people. Without local people with local relationships, it's very difficult, if not impossible, to succeed in the Permian.
I understand that Gibson has had a presence in the U.S. for a long time, but if you're going to do business in Texas, you need to do it the way it's done in Texas. Steve, myself, and the new U.S. team, we know how to do business in this part of the world, how to open doors, and I think the steps we've taken in the last year or so are evidence of this fact. We're also looking to operate in a bit of a niche space. A lot of U.S. infrastructure energy companies, like the one I used to work at, have grown too large to focus on gathering. For them to move the needle, they need to build long-haul pipes out of the basin and deploy CAD billions on one project.
For Gibson, if we get only a small piece of the gathering pie that will get that 3.5 million barrels to Wink, that will be very meaningful for this company, even if it's over a few years. There's also a lot of PE-backed players in the space. Often, these companies don't have any assets and service, have very limited or perhaps no operational capability in place, and they often don't offer a full service package like we can with the integration between our infrastructure, our trucks, and our marketing and first purchaser capability. If you talk to producers, they see value in a partner that's in it for the long haul rather than in it until they can flip the company.
It shows up in how you service the customer, it shows up in the relationship and the partnership that you build, and it also shows up in how you build and maintain the infrastructure. This is very important because Gibson needs to bring more than just a checkbook to these opportunities if we're going to be able to find one that fits our risk-adjusted return expectations. We simply can't and won't pay the kind of multiples we've seen from other players. We are happy to build at our multiple and sell at theirs. The last year or so was certainly a very busy and productive year for the U.S. team, and we are happy with the progress we've made to execute on the strategy.
We are very excited about the future of Gibson's U.S. platform. I look forward to speaking to a larger footprint at an Investor Day in the future. Thank you so much. I will now pass it on to Sean Brown, who will talk about the financial forecast and our strong balance sheet that funds all this growth. Sean?
Thanks, Orin. As you've heard today, we're extremely satisfied with all the progress that we've made since Investor Day. We're even more excited about the future of Gibson and all the high-quality growth opportunities in our portfolio as a whole. That being said, it's not only important to have an attractive suite of projects at superior risk-adjusted rates of return. Also be in a financial position to fully fund that growth without the need to access additional equity. Throughout the discussion today, we've talked about the drivers of growth within each of our business segments. Let's take a look at that on a corporate level. First, let's discuss segment profit, which as a reminder, is really EBITDA coming out of our businesses before corporate G&A. In 2018, segment profit from combined operations was CAD 500 million, inclusive of approximately CAD 35 million from divested businesses.
Roughly 60%, or CAD 300 million, was from our infrastructure businesses, with terminals and pipelines representing about 90% of that. The other 40% came from the marketing segment, which had a fantastic year in 2018, delivering over CAD 200 million in segment profit. Looking to the future, we expect that the infrastructure segment will continue to grow at an attractive rate. With clear line of sight in the near term from our projects currently sanctioned and under construction. In 2019, we anticipate infrastructure segment profit to be between CAD 300 million and CAD 320 million. That would be more than a 10% increase if you normalize 2018 results for some of the non-recurring items we saw last year. We would expect that contribution to further increase another 20% to CAD 360 million to CAD 380 million in 2020, again, largely from sanctioned projects, plus any contribution from projects we expect to sanction the balance of this year.
On the chart, we've also included each of the years since IPO in order to really demonstrate a couple of the dynamics driving the transformation of Gibson Energy. The first thing I draw your attention to is the steady growth in infrastructure. In 2011, at IPO, the infrastructure contribution was less than CAD 100 million. Where by the end of 2020, the run rate will be approaching CAD 400 million. That's a compound annual growth rate of nearly 20%, which is very impressive, especially in an infrastructure context, with it all being organically driven. The second thing I would point out is just how big of a part of Gibson the divested businesses were, especially if you look at 2013 and 2014. In 2013 and 2014, Gibson's divested businesses, such as Environmental Services and Canadian Truck Transportation, represented close to 55% of segment profit, with commodity-sensitive businesses representing close to 80%.
This is a clear visual depiction of how radical the transformation of the business has really been. Where in 2013, infrastructure would've been about a quarter of the business, in 2020, it's about 85%. I'll speak to this later in my section, this transformation has been extremely purposeful to shift the company to much higher quality and valued cash flows. Perhaps the third thing to point out here is marketing's recent performance in the context of the variability of that business. You can see that the performance we realized in 2018 was the strongest seen in any year to date. Even in 2019, where we expect marketing of around CAD 60 million in the first quarter, and have shown mid-cycle levels thereafter, it will still be one of the better years marketing has had.
An important point, though, is that with that marketing outperformance, though its contribution on a consolidated basis appears somewhat outsized at 40% for 2018, this 40% has been an important source of funding for our highest quality and highest valued infrastructure projects. At Investor Day in January of last year, we forecast CAD 150 million-CAD 200 million in growth capital spend, with that being funded almost exclusively through asset disposition proceeds. In fact, we spent closer to CAD 300 million in 2018, were able to remain fully funded because of the outperformance seen from marketing. To put all of this into context, that CAD 300 million will generate between CAD 40 million and CAD 60 million in high-quality infrastructure EBITDA on a run-rate basis. With regards to marketing, it's our goal to provide the market with as much visibility as we can.
Our most accurate estimates do not extend more than a month or two out, given the nature of the business. Hence, our approach of trying to provide an update on each of our earnings calls. When we budget internally, we assume a contribution of CAD 60 million-CAD 80 million over the long term, we believe this is the approach The Street should use as well. If we exceed that range, that's fantastic, it will only serve as an additional source of capital to fund the high-quality infrastructure growth projects, as I detailed for 2018. Long term, we are focused on our infrastructure business, if marketing outperforms, that's upside to our plan, it's not something we build our budgets around, nor rely on for servicing either our dividend or leverage.
Looking at our performance on a distributable cash flow basis, you can see that the growth we're seeing in EBITDA is driving distributable cash flow per share growth, which is our real focus. When we laid out our goal of DCF per share growth last Investor Day, we were really basing it off of 2017, as that was the year we had just completed at the time. Today, with the projects we have under construction, we have strong visibility to 2020. Such we can say that we will realize about a 10% per year growth rate in DCF per share between 2017 and 2020. Given we are assuming mid-cycle marketing for 2020, the clear driver of all this growth is through our high-quality infrastructure cash flows.
Between 2017 and 2020, distributable cash flow from infrastructure after covering all corporate obligations such as G&A, interest, and maintenance capital, will have roughly doubled. Importantly, in 2019, those infrastructure cash flows will also roughly cover our dividend, which is an important gauge for us. I will discuss our growth projects in more detail later, but we remain confident beyond 2020 that we will continue to grow our infrastructure cash flows at an attractive rate into the future. You can also see in the chart how applying the lease costs and considering the impact of taxes diminishes the relative contribution from marketing. If we're at CAD 60 million-CAD 80 million in EBITDA, about half of that is lease costs, and after also applying taxes of 27%, marketing on a cash basis is much closer to 15% of the business on a mid-cycle basis.
As a result of the non-core dispositions and the very strong financial performance in both infrastructure and marketing in 2018, we've been able to meaningfully improve our financial position, where our net debt to adjusted EBITDA was 4 times at the end of 2017. We finished 2018 at 2.3 times. In terms of payout ratio, we are just over 100% in 2017 and 67% in 2018. With both of these metrics currently below our long-term targets, we are in a much better position than we forecast last Investor Day, where our outlook was to be within our target ranges by 2020. That's been a big win for us. That said, we are very cognizant that with marketing outperforming, both these metrics will move towards their target ranges as earnings from that part of our business moves towards mid-cycle levels.
Another way we look at leverage is to consider our total leverage on just our infrastructure business. On that basis, we'd be under 4 times levered, which, to put into context, would be below most of our peers' corporate levels, which would include some commodity-sensitive cash flows as well. Going forward, we will continue to target an infrastructure-only leverage ratio of 4 times or less. While these metrics will come back into our target ranges as marketing returns to mid-cycle levels, as I discussed earlier, there are permanent benefits from that marketing outperformance in terms of our funding position. Recall that our funding strategy at Investor Day last year was to be fully funded for 2018 and 2019, the plan at that time was that growth capital would be entirely funded through divestitures and distributable cash flow would approximately equal our dividends.
The intention being that once that capital was in service in 2020, we would be self-funding. As mentioned earlier and announced this morning, we are successful in executing the divestitures. Our commercial teams also did a great job such that instead of CAD 300 million-CAD 400 million in infrastructure growth opportunities, we are over CAD 500 million for 2018 and 2019. Fortunately, with the outperformance marketing realized in 2018, we remain fully funded for all our existing sanctioned capital. If we're around CAD 60 million in EBITDA for the first quarter of 2019, like we talked about on our earnings call, we would also have some cushion even if one assumes mid-cycle marketing performance for the rest of the year.
To put all this into hard numbers, one can see on the right-hand of the slide, our total outflows for 2018 and 2019 are expected to be approximately CAD 875 million-CAD 925 million, with roughly CAD 380 million of that being dividends and the remainder growth capital. To fund this, we have approximately CAD 325 million in asset divestitures and expect CAD 500 million-CAD 550 million in distributable cash flow. With these two items alone being CAD 850 million-CAD 875 million, we are almost fully funded as is without any incremental leverage. Given the excess cash generation, though, there is an ability to add incremental leverage at our target ranges, which I'll discuss in the next slide. At a high level, though, as a retained distributable cash flow is unlevered, we would want to pair that with a debt component to maintain our target capital structure.
Whether you look at it on a 50%-60% leverage basis or 3 to 3.5 times future EBITDA, it means we can apply CAD 1-CAD 1.50 of leverage for each CAD 1 of equity from retained distributable cash flow. When one adds this incremental leverage available on a retained or excess cash flow available, we exit the year with a funding cushion of approximately CAD 150 million. As outlined previously, a key part of our core governing financial principles is to make sure that we have appropriate leverage in our business. Too low, and returns to shareholders will be diminished, but if it's too high, we'll take on too much financial risk, and there's also negative share price implications. Our target is to be in that 3 to 3.5 times debt range.
As discussed earlier, if you think about our infrastructure assets being able to support 4 times of debt, while marketing should not have any leverage, then a sum of the parts basis, we ought to be in that 3 to 3.5 times. To remain within that target range, we need to have the same capital structure on our new infrastructure growth. You could come at it from two different sides, but it's really saying the same thing. If you have 3 to 3.5 turns of debt on a project that's built at 5 to 7 times, then you're looking at something in the 50%-60% debt range. Alternatively, 50%-60% of 5 to 7 times is 3 to 3.5 times. Either approach gets to the same spot.
What this means for Gibson is that if we're deploying CAD 200 million in capital, we're going to need about CAD 80 million-CAD 100 million of equity to support that. At CAD 300 million in capital, which would drive well above the 10% DCF per share growth, we'd look to have a CAD 120 million-CAD 150 million equity component. When we say a fully funded model, what we mean is the equity component is sourced from a retained distributable cash flow. Now, infrastructure is going to be uneven with respect to when it comes in service, so we might put a bit of excess retained distributable cash flow on the balance sheet one year by paying down debt and then use it the next year.
You will have seen some of this dynamic as we think about the utilization of 2018 marketing outperformance, which resulted in a year-end leverage number well below target at 2.3 times to help fund 2019 capital, which is currently expected to be CAD 250 million or greater. Over the long term, though, a self-funding or fully funded model is one that maintains our target leverage without the need for external equity, whether discrete issuance or a continuous program like a DRIP or an ATM. This also ties back to our target payout ratio of 70%-80%. With the current pace of our capital spend, our bias would be very much the low end of that range.
For example, in 2018, our retained distributable cash flow was just under CAD 100 million, which would have internally funded a loan in excess of the CAD 150 million-CAD 200 million in capital we talked about at Investor Day last year to grow at around 10%. Tying some of these concepts together, we're likely to exit 2019 with some extra equity on our balance sheet. With the capital projects we expect to sanction, we see it being utilized in 2020. With all the projects we are bringing on, retained distributable cash flow in 2020 with marketing at mid-cycle levels should be sufficient to cover the equity component of approximately CAD 150 million-CAD 200 million of growth. To the extent that we sanction closer to 200 or more in 2020, that cushion from 2020 will come in handy.
Sorry, from 2019 will come in handy. As we continue to grow the infrastructure business beyond 2020, we see our funding capability at our target leverage is likely closer to CAD 200 million-CAD 250 million per year in total capital. If we get any upside from marketing over that time, that also improves our position, but our budgeting would not include that. The other part of the equation is really how much in capital opportunities we expect to see over the next few years. Starting out with our terminals, where we realize our best risk-adjusted returns, if we're at that two to four tanks per year, that's likely CAD 100 million-CAD 200 million in capital. We've generally pointed to about CAD 100 per shell barrel, including all the connectivity, but that's more likely more of a greenfield number.
On brownfield opportunities, like phases 2, 3, and 4 at the top of the hill, we'd be less than that. When you add in the CAD 20 million-CAD 30 million of inside-the-fence opportunities we see each year, as Doug discussed in his section, we remain confident in that CAD 100 million-CAD 200 million in total capital range for terminals. In the U.S., we've really been able to build out that platform. At Investor Day last year, we talked about targeting CAD 25 million-CAD 50 million in capital per year. As Steve and Orin discussed, with the success we're having, it's now likely in the CAD 50 million-CAD 100 million per year range. Outside the fence, as Steve discussed, we continue to target opportunities, but realize it's likely going to be somewhat uneven on a year-over-year basis.
We do think it'll average up to CAD 50 million per year in opportunities, but this will likely be zero in some years and then possibly well over 50 in others. Overall, we think this will add up to between CAD 200 million and CAD 300 million per year in capital over the medium term. At the lower end of that range, we're growing our infrastructure cash flows at or above 10% per year in the next few years, but we will need to move up to that range as time goes on. On a longer-term basis, assuming egress pipelines are built in Canada, we'd remain confident in this number. To the extent that pipelines are not built, we struggle to see significant incremental investment in the oil sands and would expect to see much more modest growth within our core terminals business.
Another key factor that will determine both the growth we see and the value we create will be the returns we see on that investment. Even if you look at the bookends of our target build multiple range of 5 to 7 times EBITDA, there's a big difference in returns between the two points. One of the comments we sometimes get on the road is, If we're truly investing at 5 to 7 times EBITDA, how come that isn't coming through in your corporate metrics? Admittedly, that's fair, as our corporate-level return metrics, whether you look in the last five years or since IPO, aren't where we'd like them to be. When you dig into the numbers, a lot of that was being driven by the divested businesses.
Within our core terminals business, we have in fact been realizing attractive rates of return very much in line with what you would expect of a 5 to 7 times investment multiple. That return is all the more attractive when you consider the quality of cash flows in terms of take-or-pay, high-quality counterparties, and term. This also demonstrates is a need to be disciplined with our capital. For example, when we are considering gathering pipeline projects in the U.S., we are looking for a higher rate of return than with our terminals because we aren't generally able to get take-or-pay contracts. The terminals will still be a better investment on a risk-adjusted basis, but we're still creating value if we find projects outside of our terminals if returns are above our risk-adjusted hurdle rate.
We would expect that as we continue to grow our terminals business and having shed the non-core businesses, our corporate return metrics will improve in the future. Shifting gears a little bit to the quality of cash flows and credit size of our business, I believe it's important to take a moment and consider the dramatic transformation the company has undergone. For that reason, this is one of my favorite slides, so I'll quickly walk through it. Looking at the business in 2014, 2017, and where we'll be in 2020, you can really see that transformation. In 2014, we're at 25% terminals and pipelines and about one-third infrastructure. By 2020, we'll be about three-quarters terminals and pipelines and fully 85% infrastructure. That shift is also driving a change in our cash flow quality. In 2014, we are 15% take-or-pay and 30% take-or-pay and total stable fee-based.
In 2020, we'll be about 60% take-or-pay and about 80% take-or-pay and stable fee-based. While we made a lot of progress on our cash flow quality and balance sheet, we also appreciate that most people are going to compare us to our peers. On a quality of cash flow basis, it's often hard to compare because everybody looks at it a bit differently. In terms of proportion of take-or-pay and fee-for-service, Gibson would be in the middle of the peer group, which I would note for the purpose of this slide includes both Enbridge and TransCanada on the far left-hand side of the graph. When you look up what makes up that bar for Gibson, it's mostly take-or-pay, with the remainder being the volumetric fee-based component related primarily to the oil sands volumes at our terminals, which is extremely ratable.
Compare this to some of our peers, which would also include fee-for-service for much shorter-term contracts, often related to conventional oil and gas production in Western Canada. Given this, we feel when considered versus our peers on a quality of cash flow basis, we compare extremely well. In addition to this, on a leverage basis, Gibson is the lowest within the peer group. We talked about our leverage being lower than expected due to our marketing outperformance and that we expect it will increase as earnings from that segment moves towards mid-cycle levels. We would note our peers would have experienced the same outperformance from their marketing segments, so the relative comparison is still valid. Many of our peers are over four times the leverage for their entire business, whereas that would be our target for just our infrastructure segment.
Given this, we would expect we will remain at the low end of the peer group regarding of marketing performance into the future. Similar to Steve speaking to the equity markets taking notice, the improvement in Gibson's credit profile has also been recognized by the rating agencies. We are very pleased with being rated investment grade by DBRS, as this was one of the goals we laid out as part of the strategy last year. We believe that attaining an investment-grade rating will be very beneficial to the company for several reasons. Front of mind to most will be access to the investment-grade credit markets, which will reduce borrowing costs and provide access to longer tenor than we could in the high-yield markets. An investment-grade credit rating is also required to really access Canadian preferred and/or hybrid market, which can be a great source of capital when funding infrastructure investments.
For that reason, it's no surprise that we see it being a part of the capital structure of all of our peers. In addition, as a result of the movement towards full investment-grade status and the current amendment and extension to our credit facility we expect to close tomorrow, we have moved to a ratings-based grid with much more attractive pricing and have negotiated a toggle into a full investment-grade credit facility, which will contain much more company-friendly features. That toggle is triggered with a second investment-grade credit rating. There are also benefits to our equity story, such as a lower overall cost of capital and interest cost savings, which helps our funding profile.
More broadly, though, we believe that it's yet another sign that Gibson has truly become an energy infrastructure company, and that the equity markets typically reward long-term, stable cash flows with a premium valuation, especially when there's visible growth. You may recall last year we talked about our governing principles as a framework to ensure Gibson maintains a very strong financial position. As a summary of what I talked about today, let me quickly walk through these governing principles as a scorecard of exactly how we are doing. In terms of our quality of cash flows, through completing the dispositions and continuing to invest in infrastructure, our quality of cash flows continues to improve. We have clear line of sight to 80% of segment profit being from high-quality structures.
Although that metric was below target in 2018, in part because of out-performance in marketing, in reality, out-performance in marketing has allowed us to realize most of our 2020 goals in 2018. With a meaningful improvement to our balance sheet, leverage today is 2.3 times relative to target of 3 to 3.5 times. Our payout ratio is at 67% relative to the target of 70%-80%. Additionally, we are fully funded for all sanctioned capital and have positioned the company to be self-funding for the long term. Today, Gibson is in a very good financial position with a strong balance sheet. That's an important part of the overall strategy. With that, I'll pass it back over to Steve.
Well, thanks a lot, Sean. The teams provided detail and color on the business. I really want to bring it back to a couple of key points. First, you've seen a lot of checks on the slides. Every person up here who showed you checks on the slides. We've executed on all facets of our strategy. We've created a focused oil infrastructure business. This is a business built around our Canadian terminals. We continue to grow our infrastructure cash flows. We will spend over a half a billion CAD in 2018 and 2019 combined. We've trued up our balance sheet. We've received our first investment-grade rating, and we're fully funded on our capital program. We are doing what we said we were going to do. We're just doing it early. Second, our strategy remains consistent.
We see significant growth opportunities in and around our terminals and in the U.S., we believe we will sanction CAD 200 million-CAD 300 million in infrastructure per year. We continue to expect to sanction two to four tanks per year, we now see U.S. as a platform where we can deploy up to CAD 100 million per year. We remain focused on driving our per-share growth. That's how we really define creating value. We will continue to be very disciplined in the projects we sanction. Our dividend is very secure. We will maintain a very strong balance sheet and remain fully funded. As I hope you see today, we have the team in place to execute our strategy. We are all very excited about the future of Gibson Energy, and I hope you share in our excitement in what this company will do in the future.
I'll now take it over to Mark. Mark?
Thanks, Steve. That concludes the formal presentation, so we're now going to move to Q&A. We will take the questions from the audience, and so that everyone in the room and also those on the webcast can hear, we would ask that you wait for Riley or Leigh to come on over with a microphone for you. If we could have our first question, I think Rob Catellier will provide.
Thank you. Good morning. Rob Catellier from CIBC. I did want to follow up on the U.S. strategy a little bit here. Sean, you alluded to the higher returns compensate for the lower risk. I'm wondering if you could provide a little bit more color there in terms of what we can expect, just sort of degrees of what might change. In particular, if you can outline some of the risks you'd be willing to take in developing out that position.
Maybe given that question's with our U.S. strategy, it'd be better for Steve. Sean can add in if there's anything else.
If you look at our 65,000 acres, that has about 10,000 barrels per day, which is a water flood, and it sees very little to no decline rate. Even if there was no drilling rigs, we would still receive about an 8%-9% rate of return on that project. There is currently three rigs drilling on that. They can move more than three rigs onto this property. We've been very modest on our projections on volumes coming off this contract. I believe that with a drilling commitment on that property, that is a great opportunity. You've got existing production with a drilling commitment and a large acreage. The main producer in the area that is on that 65,000 acres is very excited about the acreage, is currently buying up significant acreage in the area because they like that play.
Just I'll have one quick follow-up there, and then one more question. With the volume commitments you have today, do you have enough volumes on your system to be able to support a tank in the Wink hub or somehow associated with your system? Or do you need other third-party volumes to be able to support tankage?
This is a good rate of return project. This is kind of a five-time type project. We could build a tank, but any tank that we build on that 160 acres, we want it funded by a producer, and we're targeting that five-year range. The contract around any tankage at Hardisty versus tankage in the Midland are going to be very similar except for the timeframe. We're probably five years in the Wink area, and we're 10 years or plus in the Hardisty area.
The question was more whether you had enough volumes going through your system that there'd be enough demand to actually support that type of
Oh, yes.
Yeah. All right.
We believe with what we're chasing, yes. When you look on the eastern flank, we're chasing two different customers right there that we hope to sign up relatively soon. When you look on the western flank, which is the Eastern hub, you've got two super majors right there in that area, and then there's a large PE firm. We're actively talking to that PE firm to do a joint pipeline into Wink hub. With all those volumes, yes, we do believe. We're also talking to several midstreamers and marketers to build tankage at the Wink hub and contract it up.
My last question for Sean. You've mentioned a couple of times, both in this context and previously, about wanting to match the dividend and have that covered with the fee-for-service business. I believe that's a target that you have for 2020. I wondered if you can finish the thought there. That seems to sort of imply that there wouldn't be any different growth expected in your current funding plan for 2019. Do you have to have that cash flow in service or merely on a site to be able to address the dividend?
Thanks, Rob. Obviously, dividend decisions are at the discretion of the board. As I talked about in my prepared remarks, as we see 2019 infrastructure cash flows roughly cover the dividend. Another big focus for my discussion was being fully funded. Just simply covering the dividend is not enough. Otherwise, we rely on marketing our performance for this year. Our visibility right now is that any dividend increase is more likely something that we'd start considering in 2020 as opposed to 2019. The second part of your question, really, how do I think about it? Is it a trailing infrastructure cash flow or a prospective one? It'd be very much a prospective one. Any dividend increase is going to be serviced by those cash flows that'll come online in the future.
To the extent that we bank in a tank, and that has cash flow coming on, that's what I use in the equation as I consider whether or not it's the appropriate time to recommend a dividend increase.
If we can go to Jeremy back there with the mic.
Thanks. Jeremy Tonet, J.P. Morgan. Just wanted to follow up on the Permian infrastructure opportunity there. Is the focus for Gibson solely on crude oil logistics, be it gathering and terminaling? Is there any desire to go into other hydrocarbons or anything else, or really kind of sticking to your core focus there?
Maybe, Orin, do you want to speak to what we're currently doing, and then Steve, you could speak to our appetite for other opportunities?
Sure. Yeah, good question. Initially, we are just focusing on crude oil infrastructure and logistics. Natural gas and water and other hydrocarbons are not our primary focus. That said, if there was an opportunity with those to complement a crude oil infrastructure opportunity, we would consider.
That kind of handles it. We're a crude oil infrastructure company. That's our main focus. When you say that, condensate in the basin is one of the things we consider crude oil. Condensate, crude oil. One of the things about the Central Platform is it's a heavy crude oil.
In the U.S., their light sweet we would consider heavy. In the U.S., a light sweet in Canada would be considered heavy in Canada. 36 gravity and stuff. There's a lot of 52 gravity plus opportunities there. One of the things that tankage would bring is blending opportunities on a go-forward basis.
Just wanted to pivot to slide 46 here. In looking at the terminals and pipes between 2011 and 2018, it seems like you've captured some very nice unlevered rates of return here. I was wondering if you could just maybe expand upon such strong returns. Seems like competitors would want to enter this business, but it doesn't seem like people have been able to compete. Just wondering if you could talk about how you've been able to do that historically and how you see that going perspectively.
Thanks, Jeremy. This is really what we thought would be an important part of the discussion today. Doug spent a fair bit of time talking to their competitive advantage there. He discussed the fact that some of our competitors have historically are currently viewable land positions and have not been able to build a tank. It really goes a bit to what we would call our moat for competitive advantage, and that's connectivity, customer relationships. Our long history in Hardisty would be the main factors in us being able to continually build out. I think the slide that Doug showed, which was all the new tanks since 2011, is really quite powerful. These rate of returns are here. You're absolutely right.
We've been fairly public that our build multiples are five to seven times, which is extremely attractive when you consider the tenor of contracts and the quality of counterparty. We still have been really the exclusive builder of all tankage in Hardisty.
We'll go to Pat for the next question.
Thanks, Mark. Yeah, Pat Kenny, National Bank, just at Edmonton. Wondering if you could provide a bit more color on those other opportunities outside of TMX, just how you're thinking internally around waiting for TMX versus is it more of a first come, first serve basis?
Doug, maybe you can speak to our Edmonton Terminal.
Sure. Yeah. I think we're chasing customers for any tankage for any product at any point in time. At Edmonton, the unique difference between that and Hardisty is you do have a local area refinery. There is some outplay for refined products business. We do some of that refined products business today with the terminal position we have there. With North West coming on, whether that's going to run substantial heavy crude, creating more diesel output in the Alberta market is something that we consider, we continue to chase opportunities around those refined products as well as crude. No different than Hardisty. A lot of customers are looking at increased residence time with limited egress capacity. There is opportunity to look at tankage at TMX for crude and refined products.
Yeah, I'll just finish it up. When you look at that facility today, that 1.8 million barrels of tankage that we have there, three-quarters of that really serves the refineries on the refined products side. The other quarter serves the refineries on supply. On a go-forward basis, we have 100 manifest rail loading spots there. We load out a lot of diesel and other refined product. That facility, we can continue to expand on the refined products side, especially with the changes in IMO 2020.
Got it. Steve, when you came on board, a big focus was on cost reductions, where we're at in terms of reducing costs across the organization, and if there's any key metrics that we can keep an eye on going forward?
We did cut costs, really in the field at all the different facilities and G&A at the main office. We say we cut CAD 20 million on a run rate basis. That's kind of our target. We're going to have internal audits to make sure that we do continue that CAD 20 million on a run rate basis.
We will move to Linda for the next question.
I have a question with respect to the long-term aspirations in the U.S. We have seen an acceleration of the cadence of your opportunities there, I would think based on the skills of the team, that that could accelerate further. Has Gibson put thought to what sort of an appropriate business mix geographically you could see long term in terms of the min-max? I guess my follow-on question is given the presence of super majors and other potential partners down in the Wink Hub, I'm wondering also if the company has put thought to an appropriate kind of cap or concentration of customers to ensure that there's not too much reliance on certain types of customers. Can you comment on that?
I'll comment. If we spend CAD 100 million a year, which is kind of the upper end of what we're saying, we spend that over the next 5 years. You look at what Gibson looks like at the end. That means our U.S. business is still around 15% of our total business. Our total and our main focus is going to be the Hardisty Terminal on a go-forward basis. The U.S. just gives us another platform to deploy capital. We're going to be very disciplined in how we deploy capital in that basin. Obviously, you would like to have the super majors. The one thing with the super majors is they grind you, which means that a lot of times you win the opportunity, but did you really win? We're going to win.
Just as a follow-up, in terms of customer con
Customers, we're going to look at all different types of customers. We're going to look at midstream customers. We're going to look at the smaller producers in the gathering system. We're going to look at marketing organizations. We're going to look at the super majors.
Excellent. Andrew, sorry. We've got Elias back there with the mic. Sorry.
Yeah. Elias Foscolos with Industrial Alliance Securities. Question I have, back here, on Moose Jaw. Was quickly mentioned, though, that seems to be not the greatest amount of capital, but the highest return projects you have. Is there a pyramid of more capital that you can put behind that facility?
New projects in Moose Jaw opportunity in the future, Steve?
We're not actively looking to do more projects there. We are looking at those two towers are 40,000-barrel-a-day towers. There is the ability to continue to expand that opportunity. When you look at risk-adjusted returns, it is a processing facility that's driven by a crack spread, so this really requires higher risk-rated returns.
That's it.
All right, we'll move to Andrew. Just waiting for the mic.
Andrew Kuske, Credit Suisse. The first question is just on the U.S. and that CAD 50 million to CAD 100 million of capital allocation per year. Is that just really you wanted to walk before you can run, and that's really being conservative and hitting the return thresholds that you desire versus the opportunity that exists?
I think it's us being conservative. At the end of the day, we want to do what we say we're going to do. We think we have the team in place to execute that CAD 50 million to CAD 100 million. We really like our 160 acres. We built a 12-inch backbone into the facility, which allows us. We're only using 15,000 to 20,000 barrels a day to get the economics on that pipeline. The 100,000 barrels a day allows us to really ramp up a very high rate of return. We're going to connect to all the different pipelines, which is the EPIC pipeline, the Gray Oak pipeline. We're looking to connect to Energy Transfer, Enterprise, ExxonMobil. We're looking to really connect to all of those people. The backbone we're building there is a 16-inch, which gives us mainline transfer [rate] in the terminal itself.
Just as a follow-up, when you look at deals like the Oryx deal that was announced this morning with Concho, does that provide an interesting opportunity for you where you've got private equity coming into the basin? They don't necessarily have the expertise that you do and the pedigree that you do, not being patronizing about it, but does that give you another sort of outlet for capital allocation with somebody else?
We'll definitely look for partner opportunities. Concho is one of the biggest producers in the basin. Oryx has done a marvelous job of developing that oil infrastructure to support Concho. That is one of our strategies, is we kind of want to be the Switzerland where you come to us, and you can build that tankage on our property and really get connectivity to all the downstream pipelines.
We'll move to Ian.
Ian Gillies, GMP. With respect to the Canadian outside the fence growth opportunities, how is Gibson going about differentiating themselves in that space, given it is getting more competitive?
That's a tougher one. When we say 0 to 15, it's because of the competition, and we really don't know what the governmental landscape is in Canada. We feel with our Hardisty asset, we do add some competitive advantage with our Hardisty asset and the connectivity at Hardisty. When we look, that's how we were able to do the Viking play. We're looking to how do we use Hardisty in the East Duvernay play to provide that liquidity and to provide that extra market outlet for those producers.
That's helpful. Switching to West Texas, is there any marketing EBITDA built into that CAD 60 to CAD 80 run rate moving forward with respect to that business at this point in time?
Maybe since that has to do with guidance, I'll throw it over to Sean.
Nope. Not really. The CAD 60 to CAD 80 is really predominantly the Canadian business. That would be from our refined products business, which is the Moose Jaw product sales, and then our Canadian crude marketing. There'd be a nominal contribution there, but again, if you think of the CAD 60 to CAD 80 as being almost more of a holistic number, something that we budget for and would consider something conservative, it would be predominantly Canada.
Thanks very much.
All right, we'll move to the other side of the room. Robert, please.
Great. Thanks. Maybe just to start, a couple of macro political factors and industry potential changes, get your thoughts on what it means for your business. You got a couple of elections coming up. In addition, just your thoughts on a potential change on the Enbridge Mainline to a contracting structure, what that may or may not mean for third-party terminals, as well as your Moose Jaw facility.
Steve, did you want to open up with the comments on the political outlook?
Yeah. I'm not Canadian, so I'm kind of apolitical when it comes to politics in Canada. Obviously, with Notley, we saw the curtailment, and the curtailment obviously had an impact on all oil production in Canada. We believe that that curtailment at times was 500,000 barrels a day, even though she only targeted around 325-375. That had a dramatic impact in the marketplace, and it really started to shut down rail traffic. We believe the market was actually I'm a free enterprise person, so the market was actually starting to correct itself prior to the introduction of the curtailments.
We believe no matter who wins, we need to reduce those curtailments because we need to get that to CAD 18-CAD 22 spread, WCS related to the Gulf Coast price. That allows us to start moving out and utilizing the rail terminals in Canada to enable us to get our production back over $400 million a day.
Maybe did you want to speak to the corporate impact or how we would think about the change with the Enbridge Mainline?
Enbridge Mainline, we're not a big shipper on the Enbridge Mainline. The main thing that's important to us is that we're able to deliver to our Moose Jaw refinery, and that any changes does not impact our facility in Saskatchewan. It's a difficult thing to go away from a 12-month Changing allocation is extremely difficult. No matter how hard they try, there'll be somebody on the other side of the fence that'll be arguing the other point. It's going to be a difficult thing to change any kind of allocation process on an existing pipeline.
If I can finish just on the composition of your cash flows. You talked about take-or-pay, I think being 60% of 2020. I'm just wondering with the inter-corporate, is that net of the 20% or is your third party take-or-pay actually 40%?
Be closer to the 40.
Okay.
That'd be in that number.
Where do you want that number to be going forward? Particularly as you think about the capital that's going out the door and how much that might be going into the U.S. that is more likely to be area dedication.
I think Steve talked about it. We obviously want the highest quality cash flows. We've talked about our best risk-adjusted returns being from our Hardisty Terminal. We're dedicating a majority of our capital. That 60% take-or-pay, 80%-85% stable fee base, that is the target and that's what we're looking for. Again, with respect to the comments on the U.S., Steve I thought did a good job of answering. You have to put it in context. Even if we spend the upside of that CAD 100 million a year for the next five years, the U.S. maxes out at sort of 15% of the total portfolio. As you think about Hardisty continuing to grow at, call it CAD 100 million-CAD 200 million, as we talked about, the contribution to the U.S. still won't really offset those target ranges from a quality of capital perspective.
That's great. Thank you.
Do we have any more questions? We've got a question from Stuart.
Hi, Stuart Rhodes, M&G. Mine's more really a comment rather than a question. I'd just like to, on behalf of all the shareholders of M&G, because I'm not the only one, put on record our considerable thanks for the efforts that have gone into turning this company around over the last couple of years. I doubt there's a shareholder in this room or listening today that isn't pleased with what we have today versus, quite frankly, the mess we were in three years ago. We don't want to be that shareholder that just carries a stick the whole time. We want to be able to issue praise when it's really much deserved, and we're really, really pleased and think it's a great example of positive engagement.
There's been significant engagement with us and you over the last couple of years, and you've brought a significant contribution to that, and we just want to put on record our thanks for the efforts, and keep it up. Thanks.
Thanks. Really appreciate it. If we could bring a mic to Ben here.
It's Ben Pham, BMO Capital Markets. A question around Wink storage. Understand the gathering niche, strategy around there. I'm curious, you have 3.5 million barrels a day coming on in that market. How do you think of opportunity on storage? How big can it get? You mentioned first mover advantage. Is there ability to create a moat-like structure that you have in Hardisty?
That's probably in line with your background, Steve.
Yeah. I was at Wink 2 weeks ago. The first time I've been to Wink. Really, I was surprised at the activity there. The terminals that are being built to originate the 3.5 million barrels. Saw some really big tanks there. Saw some probably 800-1,000,000 barrel tanks being built and under construction. Right now, it's not a hub yet. I've been involved in hub businesses. The Henry Hub reported to me, Hardisty, Mont Belvieu. I've been involved in many hubs. I think that when you look at Cushing's kind of a trading hub. This is really much more like Hardisty. This is going to be operational storage, really to pool those barrels before they launch down into the Gulf Coast. We have 160 acres there. We can build out significant storage if the opportunity comes.
We are building some of the core infrastructure with the East Wink opportunity. We're building some of the core infrastructure to really start a hub opportunity there. How big it can be, I don't know. We're going to take a pretty measured approach when we develop this out.
Okay, the second question, the 10% DCF per share targets, it sounds like you're sitting here 2017, 2018, 2019, you've solidified that 10%. Your deal now, as your company gets bigger, it's harder to grow at 10%. Is it correct to think that you're sitting at 2020, you need to hit CAD 300 million CapEx to get the 10% growth?
Sean, maybe you speak to the math?
No, I wouldn't. I think in my remarks, I mentioned that if we're in around that CAD 200 million range for capital in the near to medium term, that gets us to that to 10% growth in infrastructure cash flows. As we move beyond that and the company starts to grow, that's where we need to move further up into that range. No, it's definitely not CAD 300 million, as we said, in 2020 to achieve 10%.
Looks like do we have any more questions? All right. I guess, seeing that we don't have any more questions here in the room, I would remind you that anytime you do have questions, please just reach out to us at investor.relations@gibsonenergy.com anytime, please. For those of you attending in person, we do have the buffet lunch available, as Steve mentioned, in addition to the presenters, we've got a large portion of our leadership team here today, so please take advantage and meet with them. Again, we would just like to thank you for your continued support of Gibson Energy, and thanks for joining us today. Thank you very much.