Executive Briefings

Canadian Railroads Move Crude South as Anti-Pipeline Protests Continue

At a time when the pipeline industry is facing opposition to new projects, rail is surging. In the span of months, executives who had never considered moving oil by train are not just tinkering with rail shipments, but embracing them. While these shipments are small for now, by one estimate rail could be carrying 100,000 barrels a day out of Canada by next year; others have suggested more than 75,000 barrels a day is already moving by train.

Even that is only the beginning: Plans are being laid to carry crude from the oil sands, as rail enters a head-to-head competition with the pipelines that have dominated the oil patch for the better part of a century.

Crude-by-rail transportation in North America overall is expected to increase next year, in part because of opposition to new pipeline projects. Consequently, Canadian oil companies are considering rail as a long-term alternative as railroads ramp up capacity. "What we're discovering as we open up our destination matrix is that rail can get to markets that pipelines don't serve now and really have no intention of serving," said Tracy Robinson, CP energy and merchandise vice president. "We do believe it will be a permanent model."

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Even that is only the beginning: Plans are being laid to carry crude from the oil sands, as rail enters a head-to-head competition with the pipelines that have dominated the oil patch for the better part of a century.

Crude-by-rail transportation in North America overall is expected to increase next year, in part because of opposition to new pipeline projects. Consequently, Canadian oil companies are considering rail as a long-term alternative as railroads ramp up capacity. "What we're discovering as we open up our destination matrix is that rail can get to markets that pipelines don't serve now and really have no intention of serving," said Tracy Robinson, CP energy and merchandise vice president. "We do believe it will be a permanent model."

Read Full Article