RPT-Canadian oil trains shift to carry less-volatile crude
(Repeats story that originally appeared earlier on May 5, no changes to headline or text)
By Nia Williams
CALGARY, Alberta May 5 (Reuters) - A growing share of Canadian oil-by-rail traffic is made up of tough-to-ignite undiluted heavy crude and raw bitumen, say industry executives, as companies scramble to cut expenditures with the price of crude down more than 40 percent since June.
By eliminating the cost of diluting with ultra-light condensate, heavy oil offers rail shippers an opportunity to claw back a few dollars per barrel in transportation costs.
Official data does not break down the different Canadian crudes shipped by rail but interviews with industry executives suggest undiluted heavy and raw bitumen shipments now make up roughly a quarter of the estimated 200,000 barrel per day (bpd) oil-by-rail market.
An added bonus is that heavy crude and bitumen are far less combustible than the Bakken and Canadian synthetic crudes involved in fiery crashes that spurred the Canadian and U.S. governments on Friday to tighten safety rules for trains carrying oil.
With very high boiling and flashpoints they fall outside Packing Groups 1 and 2, used to classify the more volatile types of crude oil for transport, and are already shipped in double-hulled cars, meaning they should be unaffected by last week's tank car phase-out rules.
Oil-by-rail shipments have come under increased scrutiny and public outrage following 10 oil-train derailments involving fires in less than two years.
"The business is moving back to where it started, which is as a vehicle to move undiluted heavy oil," said John Zahary, chief executive of Altex Energy, which operates crude-by-rail terminals. Continued...