Research broker ITG says oil production from Western Canada could double its current rate and reach 5.7 million barrels per day by 2025. It adds that around 600,000 bpd would need to move by rail in the short-term because of the lack of pipeline capacity. That's the scenario even if new pipelines come on stream.
"Pipeline capacity in the Western Canada, U.S. Rockies and U.S. Bakken production areas will not keep pace with supply growth over the next four years, requiring incremental rail shipment volumes of 600,000 bpd even if all planned pipeline projects, such as Keystone XL and Northern Gateway, proceed," the report reads.
Northern Gateway, an Enbridge plan for Western Canada, and Keystone XL, a TransCanada project for southern U.S. refineries, each face similar obstacles from environmental groups concerned about the safety of oil sands, the type of crude oil designated for those pipelines.
The American Association of Railroads reports petroleum product delivery by rail increased 58.3 percent for the week ending March 16 year-on-year.