Oilpatch leaders wait desperately to boat some-more wanton by rail with pipelines maxed out

With no capacity to gangling on pipelines out of Alberta, oilpatch leaders are desperately watchful for when they’ll be means to boat some-more wanton on rail lines.

Imperial Oil reduced oilsands operations in new months as a association had no approach of promulgation oil to market. In a initial entertain of this year, prolongation was pulled behind by about 12,000 barrels per day. 

“On any given day, we had ability to produce, though no place to put a oil,” pronounced Imperial Oil CEO Rich Kruger to reporters during a company’s annual ubiquitous assembly in Calgary on Apr 27. “We had to diminish — it was not discretionary — we had to given there was no place to put it.” 

Imperial Oil CEO Rich Kruger says his association is regulating all of a tube and railway space accessible to boat oil out of northern Alberta. (Jeff McIntosh/Canadian Press)

Husky Energy temporarily scaled behind prolongation by 5,000 barrels a day and Cenovus decided to vacillate a prolongation to furnish reduction when singular tube space lowered prices in a province. 

On any given day, we had ability to produce, though no place to put a oil.– Rich Kruger, Imperial Oil

Pipelines are a preferred method of shipping oil given they are cheaper and faster in removing product to refineries. However, both rail and pipelines are stretched right now, withdrawal companies struggling to trade oil.

Export woes

Existing tube space is full and new pipelines are delayed, such as Kinder Morgan’s Trans Mountain expansion, Enbridge’s Line 3 replacement and TransCanada’s Keystone XL.

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Meanwhile, Canada’s largest railways aren’t means to money in on servicing a oilpatch since they are grappling with too most existent burden after an above normal pellet collect final tumble and unusually tough winter weather.

The rail reserve is approaching to transparent in a latter half of this year, when oil companies can start loading adult significantly some-more tank cars.

“Rail provides a bridge,” pronounced Cenovus CEO Alex Pourbaix, until new trade pipelines are constructed.

Pourbaix said Alberta now needs between 100,000 and 300,000 barrels per day of new tube space, a figure that will usually grow as new oilsands projects like Suncor’s Fort Hills plan reach full production.

Alberta has oil rail depot loading ability of about 600,000 barrels per day and is now shipping about 100,000 barrels per day, pronounced Pourbaix.

The Cenovus CEO pronounced he’s now negotiating with CN and CP and expects to spend between $14 and $18 US per barrel, when all of a rail costs are considered. 

The travel constraints are a categorical reason because oil prices in Alberta are almost reduce compared with those for a rest of a continent. Alberta’s Western Canada Select (WCS) was offered for around $30 US per barrel less than West Texas Intermediate (WTI), a North American benchmark, in February. The WCS-WTI differential has given narrowed to about $17, though is still distant from a common normal of about $10.

Solid bitumen safer to carry

The longer a oilpatch waits for new pipelines to be constructed, a some-more a attention looks at new ways of exporting, such as shipping tender bitumen in plain form by rail.

“That’s a very, really doable technology. It is not during all experimental, it is totally commercial,” pronounced Pourbaix. “The usually thing a attention would have to do is make an investment in estimate units to take a diluent out of a product before we put it into railcars.”

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This shipping process could be reduction dangerous in a brief compared with sending glass wanton oil.

“Because we are relocating unmixed bitumen, we don’t have any of a environmental issues,” pronounced Pourbaix. “The product solidifies in a tank cars and is indeed inert.”

The approaching expansion in shipping wanton by rail doesn’t meant a oilpatch is giving adult on new tube projects. Company executives continue to contend they are assured new pipes will be built. If not, expansion skeleton might be shelved.

“For this attention to grow, we need stretched marketplace access,” pronounced Imperial’s Kruger. “It will be a large partial of the deliberations and considerations of any new expansions.”

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Article source: http://www.cbc.ca/news/business/oilsands-cn-cp-rail-imperial-cenovus-1.4641819?cmp=rss