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More bitumen moving by rail

More bitumen moving by rail

Posted on: 2/1/2018 | Author: ATB Financial's Economics + Research Team

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The amount of bitumen moving by rail is back to near-record territory, another sign that Alberta’s oil sands producers are gradually recovering from the oil price meltdown of 2015 and 2016.

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According to the latest report from Statistics Canada, there were 12,122 railcars loaded with fuel oils and crude petroleum in November–much of it bitumen from Alberta. Over the last twelve months, the total number of railcars of oil has increased by 28 per cent compared to the previous twelve month period.

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The chart below shows railcar movements of fuel oils and crude petroleum over the last 15 years. The pattern shows a consistent 2,000 to 3,000 cars per month until mid-2011. At that point, rising oil production and limited pipeline capacity forced bitumen shippers to send more product by rail. It reached a high in the summer of 2014, just prior to the oil price collapse.

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When North American benchmark oil prices fell below $US30 per barrel in early 2016, bitumen shipments collapsed along with them, dipping below 5,000 railcars that summer. With the partial oil price recovery to above $US60 per barrel, railcar shipments have picked up again.

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Moving bitumen by rail car is not only more expensive than shipping by pipeline, but also more dangerous. This underscores the urgency amongst producers for more pipeline capacity to be built to both the U.S. and the west coast.

More bitumen moving by rail, graph​ ​

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