TORONTO (Reuters) - Canadian Pacific Railway Ltd assumes Washington will approve the northern leg of the Keystone XL pipeline, and remains confident in the long-term viability of its crude-by-rail business, its chief executive said on Wednesday.
“I happen to think maybe there’s a play or a need for both,” said Hunter Harrison, CEO of Canada’s second-largest railway, referring to rail and pipelines.
He said trains can redirect shipments according to market needs more easily than pipelines.
“If the pipeline ought to be built for North America, so be it. I’m not against pipelines,” he said on a webcast of an industry conference in New York. “But I don’t think whether Keystone comes or doesn’t happen, it’s going to affect those numbers.”
TransCanada Corp is awaiting approval from the U.S. government for its controversial $5.3 billion oil pipeline proposal. When completed, Keystone would carry Alberta crude to Texas refineries.
The U.S. State Department said in a draft report last Friday that building the pipeline would not demonstrably boost emissions of greenhouse gasses.
Harrison reiterated his view that “pretty significant” growth is expected in its crude-by-rail business this year - likely double - and will swell two to three times by 2016.
Shipments of crude by rail in the United States have surged from around 11,000 barrels per day in 2007 to an estimated 340,000 bpd in 2012, becoming a booming niche market for North America’s railroads.
Harrison also said that the company’s operating ratio - a key productivity measure - could bounce “against that 70 percent barrier” in 2013. The lower the number, the more efficient the railway.
“We’ve said low-70s, but if things come together and everything hits, is there a probability that we could be below that? Certainly,” he said.
During an earnings conference call earlier this year, Harrison said the company expects its operating ratio, which stood at 74.8 in the fourth quarter, to be in the low-70 percent range.
Reporting by Solarina Ho; Editing by David Gregorio