Canada's Enbridge considers crude-by-rail to British Columbia coast

07 May 2014 19:13 Source:ICIS News

TORONTO (ICIS)--Enbridge is considering investing in crude-by-rail to ship oil from Alberta province to the British Columbia coast, the CEO of the Canadian energy infrastructure major said on Wednesday.

Crude-by-rail would be an option if Enbridge’s planned Northern Gateway export pipeline project should fail to get approval.

"We are thinking about those [crude-by-rail] opportunities", given current pipeline capacity constraints, CEO Al Monaco said in a conference call.

Crude-by-rail was particularly relevant in cases where timing issues or other factors delayed or precluded pipeline developments, he said.

He added that Enbridge and a partner recently completed a rail facility near Philadelphia that will handle Bakken and other light oil for refineries in that area. That project has an initial capacity of 80,000 bbl/day and is expandable to 160,000 bbl/day.

Commenting generally on the surge in crude-by-rail in North America, Monaco said that while oil producers want options for their shipments, eventually "economics should drive volumes back onto pipelines" as new pipeline capacities come online.

Enbridge chief financial officer Richard Bird added that the company has a "permanent rail component" in its volume forecasts for North America.

Bird also said that Canada’s recent government order to phase out or upgrade older DOT 111 tank railcars by 2017 is not likely to have a significant impact on the role of crude-by-rail as the industry would have enough time to take action.

Northern Gateway would, if realized, provide access for Canadian oil to markets in the Pacific Rim. It would help reduce Canada’s dependence on the US market for its oil exports. This has become a priority for Canada’s oil industry as it still remains unclear whether the US will approve the northern leg of the long-delayed Keystone XL oil pipeline project from Alberta to the US.

However, Northern Gateway has met with opposition from environmentalists and from Canadian aboriginal people whose land the pipeline would be crossing.

Last year, a review panel recommended that the Canadian federal government approve Northern Gateway, subject to more than 200 conditions. The government is expected to make a final decision by July.

By Stefan Baumgarten