May 24, 2019 / 9:48 PM / 6 months ago

UPDATE 1-Gibson to load 225,000 bpd of Canadian crude-by-rail by summer's end - CEO

(Adds CEO quote, details on Canadian crude-by-rail)

By Nia Williams

CALGARY, Alberta, May 24 (Reuters) - Canadian midstream company Gibson Energy is loading 60 unit trains per month at the Hardisty, Alberta, crude-by-rail terminal and that will rise to 90 trains per month by the end of the summer, Chief Executive Steve Spaulding said on Friday.

Each unit train can carry around 60,000-75,000 barrels, which would put total loadings at 180,000-225,000 barrels per day (bpd) by summer’s end.

The increase in crude-by-rail loadings comes as the discount on Canadian crude versus U.S. oil hovers around its widest level in six months, making rail shipments more profitable.

“As of late, we are moving as many rail cars as we have ever moved, and next month that’s expected to be even higher,” Spaulding told Reuters in a phone interview.

The Hardisty terminal is owned by USD Partners LP and used exclusively by Gibson Energy.

Landlocked Alberta is home to Canada’s vast oil sands and some of the world’s largest crude reserves, but producers struggle to get their oil to market because demand for space on export pipelines exceeds capacity.

Canadian crude-by-rail exports hit an all-time high last December of 354,000 bpd, according to Canada’s National Energy Board regulator, before collapsing in February after the Alberta government mandated production curtailments to drain a glut of crude in the province. That pushed prices sharply higher but eroded the profitability of shipping crude by rail.

In recent months crude-by-rail has shown signs of recovery as the discount on Canadian crude has widened, with large oil sands producers like Imperial Oil restarting shipments after stopping them completely.

Benchmark heavy crude Western Canada Select last settled at $18.50 per barrel below U.S. crude futures, according to Net Energy Exchange.

The latest data from the NEB showed crude-by-rail exports at 168,000 bpd in March. Energy information provider Genscape, which tracks Canadian crude-by-rail shipments destined for both Canadian and international markets, said loadings averaged 197,000 bpd in April.

Reporting by Nia Williams Editing by Tom Brown and Leslie Adler

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