MONTREAL — The head of Canada’s largest railway says ferrying crude remains a lucrative, albeit temporary solution to Canada’s pipeline quandary.
Canadian National Railway Co. chief executive Jean-Jacques Ruest says the company ramped up capacity with more track, crews and locomotives, only to see volumes fall this year from record highs last autumn after Alberta lowered the oil production cap to free up export pipeline space and boost the price of Western Canadian Select amid an oil glut.
Ruest, who has headed CN since July, says he sees railway’s role in the commodity as complimentary, a bridge between the past and the near future when pipelines will again bear the lion’s share of the black stuff.
Attempts to build or expand pipelines have faltered the last few years, leaving railways to pick up the slack. Major projects such as the Northern Gateway and Energy East pipelines were cancelled, and delays continue to snarl the Trans Mountain expansion, Line 3 replacement and Keystone XL pipeline.
Meanwhile CN Rail and Canadian Pacific Railway Ltd. shipped 23 per cent more oil and petroleum in 2018, according to the Association of American Railways. Crude-by-rail exports hit a record 327,229 barrels per day in October, a 58 per cent year-over-year increase, according to the National Energy Board.
Ruest says CN’s crude-by-rail exports to the U.S. are currently down 40 per cent from December to about 150,000 barrels per day — though year-over-year revenue from petroleum and chemicals still rose 25 per cent last quarter. He says the incoming United Conservative Party government in Alberta might hasten a roll-back of the production curtailment, but declined to speculate further, saying the province would do what’s best for its residents and the country.
Companies in this story: (TSX:CNR, TSX:CP)
The Canadian Press