(Adds context on market access, rail capacity, quotes)
By Nia Williams
CALGARY, Alberta, Oct 8 (Reuters) - Canadian crude exports to the United States topped 3 million barrels per day last week for the first time, suggesting delays to new export pipelines such as TransCanada Corp’s Keystone XL were failing to check oil sands development.
Environmental groups are fiercely opposed to new pipeline projects connecting Alberta’s oil sands to the United States and the east and west coasts, reasoning that without market access crude production will slow.
TransCanada’s controversial Keystone XL project, intended to carry 830,000 barrels per day (bpd) to the U.S. Gulf Coast, is mired in its sixth year of waiting for a presidential permit from the Obama administration. Enbridge Inc has also run into regulatory delays on its cross-border Alberta Clipper pipeline expansion project.
But the latest weekly data from the U.S. Environmental Information Administration shows Canadian crude exports are ramping up rapidly despite the pipeline impasse.
Canada, the No. 1 supplier of crude to the United States, exported 3.248 million bpd of crude to its southern neighbor in the week ended Oct. 3, up 18 percent from the previous week and up 35 percent from the same period a year earlier.
The four-week average to Oct. 3 was 2.977 million bpd.
“It’s a pretty clear indication that crude will find its way to market around various constraints,” said Sandy Fielden, analyst at RBN Energy.
CIBC World Markets said much of the increase in crude exports was due to the ramp up in shipments of crude oil by rail from western Canada.
Canada exported around 163,000 bpd by rail in the second quarter of 2014, according to the latest National Energy Board data, although that figure is expected to increase rapidly.
Canexus Corp reopened its Bruderheim, Alberta, rail terminal last month after a summer shutdown, while U.S. Development Group and Gibson Energy Inc’s Hardisty unit train terminal is ramping up to full capacity of 140,000 bpd.
By the end of 2015, western Canadian rail uploading capacity for crude oil is expected to exceed 1 million bpd, according to the Canadian Association of Petroleum Producers.
Canada has the world’s third-largest crude reserves after Saudi Arabia and Venezuela. Oil production is expected to reach 3.91 million bpd next year and 6.44 million bpd by 2030, according to CAPP.
The bulk of crude exports is still shipped south on Enbridge’s 2.5 million bpd Mainline export network, which is undergoing an expansion program to deal with frequent congestion as oil sands supply outpaces pipeline capacity.
RBN’s Fielden said the surge in exports was likely linked to increased rail loadings and demand for linefill on Enbridge’s new 600,000 bpd Flanagan South and reversed Line 9 pipelines, both due to start operating in the fourth quarter.
Canadian crude exports look set to rise further as producers explore inventive alternatives to improve market access.
Suncor Energy Inc sent its first cargo of western Canadian heavy crude to Europe from Canada’s east coast last month after shipping the crude by rail to Quebec.
Environmentalists said the fact crude exports had passed the 3 million bpd mark did not mean pipeline campaigns were ineffective, but the rise of rail was concerning.
“We have seen our fair share of oil-by-rail disasters,” said Mike Hudema, climate and energy campaigner at Greenpeace Canada.
In 2013 a crude oil train crashed and exploded in the center of Lac-Megantic, Quebec, killing 47 people. (Editing by Meredith Mazzilli, Leslie Adler and James Dalgleish)