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Canadian oil exports by rail nearly doubled

While Canada works to expand its pipeline capacity, total crude oil exports by rail surged 87 percent from last year, federal data show.

By
Daniel J. Graeber
Federal data from Canada show the amount of oil exported by rail in June was nearly 90 percent higher than the previous year. File Photo by Steven Frame/Shutterstock
Federal data from Canada show the amount of oil exported by rail in June was nearly 90 percent higher than the previous year. File Photo by Steven Frame/Shutterstock

Aug. 23 (UPI) -- A Canadian energy regulator reported the average daily amount of crude oil exported by rail has nearly doubled from the previous year.

Canada designates nearly all of its oil exports to the United States. For the last week in June, U.S. federal data show Canada exports to the United States were up 11.8 percent from the same time last year. The four-week moving average for that week was 12.2 percent higher year-over-year.

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The National Energy Board, the Canadian regulator, reported total crude oil exports by rail for June averaged 204,558 barrels per day, an 87 percent increase from last year. June was the last full month for which the NEB reported data on crude oil exports by rail.

Most of the Canadian oil sent to the United States runs through transnational pipelines. The bulk of the Canadian oil exported to the United States heads to the Gulf Coast, where oil storage facilities, refineries and export terminals are concentrated.

RELATED Alberta offers financial support for Trans Mountain pipeline

Without more pipeline capacity, much of the extra oil coming from North America would be landlocked, Canada in particular. A string of transit networks run mostly out of Alberta, including the Keystone oil pipeline from operator TransCanada.

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Kevin Birn, the director for regional energy projects at consultant group IHS Markit, told UPI the constraints on Canadian takeaway capacity has suppressed the price for the Canadian crude oil benchmark by as much as $30 per barrel relative to West Texas Intermediate, the U.S. benchmark.

"With western Canadian pipelines full, greater volumes crude by rail volumes will continue to grow into the fall," he added. "We expect movement to average between 200,000 to 300,000 barrels per day for the year."

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TransCanada is trying to expand that network to southern U.S. export terminals through Keystone XL, though that project is delayed in the U.S. courts by challenges from an environmental community worried about the potential harm from the heavier type of oil found in Canada.

Pipeline company Kinder Morgan, for its part, is trying to triple the capacity of its Trans Mountain network to British Columbia ports, though regional opposition there has been raised in response to the eventual increase in tanker traffic. The federal Canadian government has a stake in the project.

Meanwhile, rail carries its own risks. More than 40 people died in Lac-Megantic, Quebec, in 2013 when a train carrying oil derailed and exploded.

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RELATED Canada says oil pipeline capacity lacking

In a financial update from early August, the provincial government in Alberta reported that crude oil production was more than existing pipelines could handle, forcing oil producers to turn to rail to make up for the difference.

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