CP eyes signs of life in crude ship­ments

The Globe and Mail Metro (Ontario Edition) - - Report On Business - AL­LI­SON LAM­PERT MON­TREAL NIA WIL­LIAMS CAL­GARY

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.

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