canadian oil sands

With the Keystone Pipeline decision booted down the road again Friday, the challenge for Canadian oil sands producers trying to get their crude to market looms large once again. Growing volumes of Canadian crude will be carried by rail this year to bypass pipeline congestion. But although larger unit trains are beginning to operate from the oil sands region, they mostly help larger producers connected to the pipeline feeder network. Today we review continuing manifest rail shipments by small producers.

There is a bright future for crude by rail in the oil shale plays regardless of what happens to crude price differentials. That is because the flexibility of rail transport meshes well with the rhythm of shale oil development. Meantime Canadian heavy crude will be the focus for rail terminal development in the near term as continued pipeline delays force producers to look seriously at rail options. And the economics of raw bitumen by rail may end up undercutting pipelines. Today we look ahead to these trends.

NYMEX WTI crude traded at over $100/Bbl for most of March through May this year. With today’s close at $79.21/Bbl, the price is down 28 percent from this year’s highs. Canadian heavy crude bitumen postings fell to $64/Bbl last week. Could a press release from a small Canadian oil exploration company last week be the first indication of investor concern? In today’s blog, we ask whether Canadian Oil Sands production costs are too high to justify new investment.