PHOTOCAPTION.

23 June 2013

Canada Railways Split on Crude
as Keystone Ruling Looms

New York New York USA - Canadian National Railway sees "tremendous" growth in shipping oil by train. Hunter Harrison, who runs its biggest rival, says he isn't so sure as he looks at potential pipeline competition.
 
Canadian Pacific Railway started carrying crude a year before CN and is ahead in volume shipped. Still, Chief Executive Officer Harrison, who was CEO of Canadian National from 2003 to 2009, says he's cautious about the outlook.
 
"I'm not sure how long this market is going to last," he told a transportation conference in New York on 22 May 2013. "Whether it's going to be everything that people are cracking it up to be, I kind of doubt."
 
CP and CN are among railroads taking advantage of a boom in crude shipments in North America. Those benefits may fade if President Obama approves construction of the Keystone XL pipeline from Alberta's oil sands to the Gulf Coast. Oil marketer Gibson Energy Inc. says it costs as much as $11 a barrel to carry crude by pipeline along that route, compared with as much as $21 per barrel by train.
 
Rail is "just a bridge" being used by oil shippers until more pipelines are built, said Eric Bushell, chief investment officer of CI Investments. "Over time the energy industry will find low-cost options by pipe."
 
U.S. railroads shipped a record volume of crude in the first three months of the year, the Association of American Railroads said 30 May 2013. In Canada, shipments should double to more than 300,000 barrels per day by the end of this year, according to Calgary-based investment bank Peters & Co.
 
Some of the shipments work their way to Delaware for use in the PBF refinery outside of Delaware City.
 
Increased crude deliveries have helped CN and CP offset slower growth in freight such as grain and coal. Future expansion will be driven by oil-sands producers shipping heavy crude, in addition to light oil from North Dakota's Bakken region, said James Cairns, CN's vice president of petroleum and chemicals.
 
A glut in the central U.S. pipeline network has depressed the price of heavy crude from the oil sands, known as Western Canada Select. Oil-sands crude has traded at an average discount this year of $23 a barrel to the main U.S. grade, according to data compiled by Bloomberg.
 
Andrew Mayeda.

Vancouver Island
British Columbia
Canada