Western Canadian crude-by-rail is set to continue reaching record highs in the near future as regional crude production continues to increase and extra pipeline takeaway capacity remains years away. Genscape added two new rail terminals in Western Canada to capture more of those crude liftings in the PetroRail report.
With the addition of Plains All American’s rail loading terminal in Kerrobert, SK, and Altex Energy’s 88,000 bpd Lashburn, SK, Genscape increased the monitored rail loading capacity coverage in Western Canada to approximately 50 percent from 36.5 percent. In June, prior to the adding the Kerrobert and Lashburn terminals, Genscape data accounted for 76 percent of the overall crude oil exported by rail from Canada as reported in the latest information from Canada’s National Energy Board.
Genscape began monitoring Plains All American’s rail loading terminal in Kerrobert, SK, on August 21, with historical data beginning July 18. The facility has a loading capacity of 80,000 bpd and assumed to load rail-cars with a capacity of 600 bbls of heavy crude per car.
Between weeks ending July 20 and August 17, the Kerrobert terminal averaged 13,000 bpd, reaching a high of 31,000 bpd in week ending July 27.
Additionally, Genscape added Altex Energy’s 88,000 bpd Lashburn, SK, rail loading terminal to its list of monitored Western Canadian rail facilities in the PetroRail report on July 24 with historical data going back to June 29.
The Lashburn facility had loadings in seven consecutive weeks, loading an average of 8,000 bpd between weeks ending June 29 and August 17, hitting a high of 16,000 bpd in two separate weeks.
Crude-By-Rail Surges as Pipeline Capacity Falls Short
The growth in Western Canadian crude production caused greater demand for takeaway capacity from the region, but with pipeline projects slow to catch up, this opened an opportunity for crude-by-rail.
Crude output from Western Canada was 3.599mn bpd in January 2014 and is forecast to hit 4.202mn bpd in August 2018. Genscape’s Canadian Oil Production Forecast projects output to increase to over 4.6mn bpd by mid-2022.
Meanwhile, current pipeline capacity from the region is about 4.28mn bpd with a portion of that landing in Burnaby, BC, and Puget Sound refineries. The high production leaves little space on those pipelines leading to inflated apportionment on Enbridge’s 2.665mn bpd Mainline pipeline system. Monitored pipeline utilization from Canada to the U.S. averaged 96 percent so far this year, as of August 17, according to Genscape’s Canadian Pipeline Service.
U.S. East Coast, Midwest and Gulf Coast crude-by-rail volumes boomed due to the inability to ship on pipelines and refiners looking for Canadian crude in regions without pipeline access. Shipments of crude by trains from monitored facilities in Western Canada reached record monthly high averages in six of the last eight months, including five straight months, with July at 168,000 bpd, as reported by Genscape.
Enbridge’s pipeline expansion on its Hardisty, AB,-to-Superior, WI, Line 3 (+370,000 bpd) and optimization efforts on the Edmonton, AB,-to-U.S. Midwest Mainline systems (Possible +175,000 bpd) are set to add a combined 545,000 bpd of capacity in mid-to-late 2019. However, pipeline space is not set to surpass Canadian production until January 2021, when TransCanada’s 830,000 bpd Keystone XL pipeline and Kinder Morgan’s 590,000 bpd TransMountain Expansion are set to become operational.
Western Canadian crude-by-rail is positioned to be an essential mode of transport until pipeline projects debottleneck the supply chain. Genscape’s proprietary network of monitors allows customers the most granular information on crude production, pipeline and rail volumes.
Using its proprietary monitoring technology and industry expertise, Genscape offers an unprecedented view into rail loading and unloading volume data, critical pipeline flows between the U.S. and Canada and provides a detailed production forecast and analysis into the most significant oil producing areas in Canada. By providing transparency in this area, Genscape has altered the trading landscape, offering market participants an unmatched platform for use in trading and hedging strategies.
Genscape's PetroRail Report includes fundamental rail loading and unloading volume data, focusing on Bakken and Western Canada loadings. The report also includes, market analysis and spot price assessments for U.S. crude benchmarks. For more information on our PetroRail Report, click here.
Genscape's Canadian Pipeline Service includes pipeline flow updates every half hour for more than 85 percent of Canada-to-U.S. pipeline capacity, including including on Enbridge's Mainline, the main artery for Canadian pipeline flows into the U.S, and TransCanada's Keystone pipeline, as well as alerts on pipeline events and construction updates. Click here to request a free trial of Genscape's Canadian Pipeline Service.
Genscape’s Canadian Crude Oil Production Forecast uses a highly detailed bottom-up approach that provides a provincial well level data along with oil sands in-situ project and upgrader level data to provide the most accurate and detailed driven supply forecast report on the market. To learn more on our Canadian Crude Production Forecast for oil, click here.