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Fort St. John
Sunday, October 21, 2018
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Crude by rail exports hit three year high as Canadian oil discounts rise

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CALGARY, A.B. – The National Energy Board says exports of Canadian crude oil by rail to the United States jumped to a three-year high in March.

In a report, the federal agency says average crude-by-rail volumes reached just over 170,000 barrels per day, the highest since December 2014.

The NEB says crude-by-rail exports were driven by steep discounts for Western Canadian Select heavy oil versus New York-traded West Texas Intermediate, with the March average price difference at about US$23 per barrel.

The price difference makes the higher cost of shipping by rail versus pipeline worthwhile because the barrels sell for higher prices at their destination in the U.S. than they would have in Canada.

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The NEB says the rising use of rail was also sparked by the fact major Canadian export pipelines operated at or near maximum capacity during the month.

In the first quarter of 2018, about 75 percent of Canadian rail exports were destined for the U.S. East Coast and Gulf Coast.

The Gulf Coast is the largest refining region in the U.S. and has a large capacity to process Canadian heavy crude oil.

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