Heavy Oil Sands

Five large-scale rail terminals planned or being constructed in Western Canada will be able to ship up to 550 Mb/d of crude by 2015. Most of that crude will be headed to the Gulf Coast. If crude by rail shipments from Canada are going to compete with pipeline alternatives then the ability to ship bitumen crude raw without diluent will be an important advantage. Yet only about 170 Mb/d of rail terminal capacity is currently built or being developed on the Gulf Coast that can offload raw bitumen using special heating equipment. Today we complete a survey of CN railroad unloading facilities at the Gulf Coast.

Western Canadian heavy crude oil producers have a lot of rail tank cars on order but so far none of the loading terminals in the production region can handle unit trains. The pace of terminal development in Alberta is far slower than North Dakota in 2012. Because you can ship raw bitumen without diluent there are potential cost savings over pipelines but the load and offload facilities are more complex. Today we conclude our mini survey of Canadian heavy crude loading terminals.

Western Canadian heavy crude production is set to increase by more than 1 MMb/d over the next 5 years. Pipelines out of the region are full and new capacity is not expected online until 2014. Just like the Bakken in 2012, producers are looking more seriously at rail. The economics of getting crudes like Western Canadian Select (WCS) to market by rail instead of pipeline are favorable because of heavy discounts versus Gulf Coast equivalent crudes like Mexican Maya. Today we look at the rail options for Canadian producers.