CP eyes signs of life in crude shipments
Canadian Pacific Railway Ltd. sees shipments of crude by rail “coming alive a little bit,” chief marketing officer John Brooks said on Tuesday, signalling a pickup in a business that had been hurt by low energy prices and competition from pipelines.
Many traders are expecting a pickup in crude by rail volumes in 2018 as oil sands projects, including Suncor Energy Inc.’s Fort Hills plant and the latest phase of Canadian Natural Resources Ltd.’s Horizon oil sands, start producing at the end of this year.
Canadian railway executives, however, remain cautious about crudeby-rail demand after they were forced to slash rates for shipping crude in 2015 owing to a rout in global oil prices.
CP, Canada’s second-largest railroad, in October reported a betterthan-expected quarterly profit on higher shipments of crude oil, coal and potash.
Energy-industry players are bracing for congestion on Canada’s major export pipelines, which are running close to capacity, while underutilized rail loading terminals built during a crude-by-rail boom in 2014 are increasing loading volumes.
The most recent National Energy Board data showed Canada exported 93,000 barrels a day by rail in July, down 40 per cent from a 2017 high of 156,000 b/d in March.
However, since the summer the price discount on Canadian crude in Alberta versus its global benchmark has widened and is expected to deepen in coming months.