Crude-by-rail shipments to more than double: IEA

CALGARY – Crude-by-rail shipments could more than double over the next two years from historic highs as a lack of pipeline capacity forces producers to look to alternatives, said the International Energy Agency Monday.

The Paris-based IEA forecasts in its latest oil markets report that crude-by-rail exports will grow from 150,000 barrels a day in late 2017 to 250,000 barrels a day this year and then to 390,000 barrels a day in 2019.

“Crude by rail exports are likely to enjoy a renaissance,” said the IEA, as at the end of 2017 oil available for export was 310,000 barrels a day higher than the take away pipeline capacity.

With oilsands production expected to keep growing, crude-by-rail shipments could peak as high as 590,000 barrels a day in 2019 if producers don’t resort to crude storage in peak months, the IEA said.

The shipments are significantly higher than the current record of 179,000 barrels a day reached in September 2014 before oil prices collapsed.

The increase in shipments comes after an increase in railway incidents in 2017, including a 21 per cent jump in accidents from a year earlier and the number of dangerous goods leaks increasing from two to five.

The IEA says rail shipments are expected to return to around the 170,000-barrel-aday level in 2020, assuming Enbridge Inc. replaces its Line 3 pipeline and adds capacity elsewhere on its Mainline pipeline system.

The Line 3 replacement, however, faces significant opposition in Minnesota and the company isn’t expected to hear on its approval in the state until this summer.

The IEA also raised doubts that the capacity additions from Kinder Morgan’s Trans Mountain and TransCanada’s Keystone XL pipeline projects will actually get built.

“We must acknowledge the substantial risks that those upgrades will be delayed or even cancelled, possibly due to legal action.”