Record Number of Oil Moved by Train!

Plainsman Manufacturing

Canada waits for the construction of more pipelines whilst breaking records in oil exports. Statistics by the New National Energy Board set the record at 199,000 barrels of oil exported per day in the month of May. This growth is promising and will not slow down in the near future. Statistics show that the number is expected to grow about 500,000 barrels more per day during the next two years. However, the construction of new rail lines plays an increasingly crucial role in the successful transportation of oil.

Canadian oil sand producers continue to see growth in the output volume of oil as investment in pipeline projects continue to expand. Since existing pipelines are currently full, oil sand producers’ growth is highly dependent on the execution and development of these projects.

Given this situation, producers are turning to trains for transportation of crude oils and the demand for new rail lines is only going to grow until the necessary pipelines are implemented.

Consequently, prices are being affected seeing how rail line alternatives have higher transportation costs. Adding the needed pipeline capacity will allow Alberta to receive US $7 more for each barrel than transporting it via railing to the U.S.

On top of that, some oil services had to slow down this year since trains were busy with the transportation of other commodities such as grains. The appropriate investments have been made in capital, locomotive power and personnel to ultimately grow Canada’s oil transportation capacity through new rail lines. The investments make sense since the country is rich in oils and hence needs to exploit its resources efficiently. While pipelines have been the main source for transporting oil in Canada, railway has become increasingly important as well

Canadian Pacific Railway said it ran about 20,000 carloads, 60 trains each month in just one quarter. Some oil companies are looking to make long term investments and deals with railways companies.

Although transporting oil through rail lines is an important project in Canada today, moving oil by pipelines is less expensive and safer. Therefore, oil producers have nothing left but to wait for more pipelines to be built and use trains as the alternative to transport oil. The absence of enough pipelines has caused a spike of oil transported to the United States via trains since 2010. This trend is sure to continue spiking as demand for oil grows and the lack of pipeline forces producers to turn to trains for alternative transportation.

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