Canadian Q1 crude-by-rail exports dive 28 pct year-on-year
By Nia Williams
CALGARY, Alberta, June 2 (Reuters) - Canadian crude oil exports by rail in the first quarter plunged 28 percent year-on-year, the National Energy Board said on Tuesday, as shippers moved more crude by pipeline, which was cheaper.
Between January and March this year, shippers exported on average 119,755 barrels per day of crude by rail to the United States.
That was down more than a quarter from the 165,254 bpd exported in the first quarter of 2014, and a 24 percent decrease from the 158,532 bpd shipped in the fourth quarter of last year, according to the latest data from the Canadian regulator.
ARC Financial analyst Jackie Forrest said rail volumes dropped because Enbridge Inc, whose Mainline system ships the bulk of Canadian crude exports to the United States, added 340,000 bpd of capacity to its pipeline network through debottlenecking and expansions over the last 12 months.
"The biggest thing driving the rail volumes is the actual supply versus the amount of pipeline capacity we have," Forrest said. "Because pipeline is cheaper than rail, the preference will be to fill the extra pipeline capacity."
Total Canadian crude supply has also declined to around 4 million bpd since hitting a peak of 4.6 million bpd in January, according to a Barclays research note, as a result of maintenance in the oil sands patch and recent wildfires in Alberta.
That dip in production is likely to be temporary however, as new projects come online this year.
Canadian heavy crude is currently trading at a discount of $7.00 a barrel to U.S. benchmark crude oil futures, the narrowest differential in more than five years, which does not cover the cost of oil trains to U.S. markets. Continued...