The equivalent of hundreds of thousands of barrels of oil a day will soon be moving from western Canada into the U.S.—even if the controversial Keystone XL Pipeline is never built.
The energy industry is moving full steam ahead to move crude on rail cars—a fast growing business, booming along with increased North American oil production and already responsible for moving most of the oil out of the Bakken region in North Dakota.
Canada's railroads, Canadian Pacific Railway Ltd and larger Canadian National Railway Co both report expanded oil shipments this year and both expect demand to continue to grow. Canadian Pacific told investors it expects shipments of 85,000 to 90,000 car loads by the end of the year. A spokesman for Canadian National said the railroad expects to see 60,000 carloads this year, double last year's level.
As the U.S. contemplates the merit of the stalled Keystone pipeline project, which would take Canadian oil to U.S. Gulf Coast refineries, rail companies in Canada have been moving quickly to add capacity in five major projects. By the end of next year, rail loading capacity could grow enough to handle 700,000 barrels of crude a day from the oil sands region in western Canada, according to IHS data. Trains currently carry just 150,000 barrels from there, and more than 450,000 barrels a day could be riding the rails by the end of next year.
"It's important because access to the Gulf Coast is really critical for oil sands producers, but there are other options to get there. The supply will come on at a similar rate in the longer-term because we think other pipeline options and/or rail will get the crude there," said Jackie Forrest, IHS director of global oil.