Canadian National Rail expects to double its crude oil shipments in 2013 from the 30,000 carloads it is scheduled to carry this year, Jean-Jacques Ruest, the railway’s chief marketing officer, estimated.
CNR logged only 5,000 carloads in 2011, since when it has recorded increases every quarter, he said.
Ruest said the estimate for 2013 factors in “projects that we have on the plan right now” and assumes a “reasonable winter” will allow necessary construction to be finished.
CNR has experienced the same rapid increase in crude oil traffic as other North American railroads, benefitting heavily from fast-rising output in the Bakken and similar plays and the desire of producers to access higher-priced Brent crude markets.
Rival Canadian Pacific Rail moved about 8.3 million barrels of crude in 2011 and expects to reach 44.8 million barrels in 2013 compared with CNR’s 3.2 million barrels in 2011 and anticipated 19.2 million barrels this year.
Both companies base their estimates on 640 barrels of crude per rail car.
The use of rail has also received a boost from a briefing note for Canadian Prime Minister Stephen Harper which said that although pipelines remain more efficient and cost-effective, rail companies need no regulatory approval to haul Western Canadian crude to markets.
In addition, pipeline operators in North America are strictly regulated and have a strong overall safety record, said the document from the Privy Council, which advises the prime minister and cabinet ministers.
The Harper government has been exploring all available means of broadening Canada’s crude export markets beyond the United States, with its major emphasis on opening routes to the Asia-Pacific region.
Wayne Wouters, clerk of the Privy Council, said rail could play a role in facilitation access to the British Columbia coast, but he said the “mode would not readily substitute for the 525,000 barrels per day that could flow through the Northern Gateway pipeline or the 300,000 bpd additional capacity associated with Kinder Morgan’s Trans Mountain pipeline expansion.”
Although Transport Canada officials have confirmed there are no regulatory barriers to transporting crude by rail, tankers from the West Coast need lengthy environmental assessments for marine terminals and tanker traffic, the note said.
The Privy Council noted that CNR is working on a pipeline-on-rail business model with Altex Energy and is proposing to “voluntarily use double-hulled rail cars for the transport of oil” as a precaution against spills.
—Gary Park
