A shortage of tankers poses one of the greatest infrastructure deficiencies standing in the way of rail transport for crude producers, a Calgary business conference heard Oct. 25.
That message from Randy Majors, business development and senior vice president for TransMontaigne Partners, was echoed by Glen Perry, marketing vice president for Grizzly Oil Sands, who forecast it will take two years to get the required number of coiled and insulated railcars on the tracks.
He said that obstacle has “really slowed down the growth of heavy oil and bitumen.”
Despite the arrival in the next six months of participants with the necessary cars, most railcars leaving Alberta are old, well-used and come from some other sector.
“We just kind of rerouted them into this trade,” Perry said.
Potential California market
Crude transportation by rail opens up a potential untapped market in California for Canadian crude, said Ed Koshka, operations vice president for E-T Energy.
He noted that California uses about 1.8 million barrels per day and processes it through some of the most sophisticated refineries in the world.
But the absence of pipelines for Canadian crude to access the Golden State opens the door to shipments by rail, Koshka said.
But, again, capital investment poses the biggest challenge, he said.
Other speakers noted that large refineries are also unable or unwilling to handle crude from railcars and suggested that midstream companies could help by taking crude from railcars and sending it on to refineries for processing.
Perry said he knows of a refinery which process 250,000 bpd of crude and views a railcar delivering 500 barrels of crude as too small to be worth the required handling effort.
However, he noted that some facilities in New Brunswick, Delaware and the Gulf Coast are adapting their plants to accept crude directly from railcars.
Koshka suggested that convincing more refineries to take that route might simply require proof that the change is not so great.
He said many refineries load their products on to railcars, “so you’ve just got to get them to think about doing it at the front end.”
—Kay Cashman
