​Chart: Canadian crude by rail exports on track to crack highs: GMP FirstEnergy

Image: Deborah Jaremko/JWN

Recent data shows Canadian crude-by-rail exports are on an upswing, a trend that analysts expect will rise and even surpass record highs in the near terms.

It’s a simple matter of crude oil supply versus export pipeline capacity, with rail picking up the slack.

Crude by rail volumes from Canada peaked at 178,989 bbl/d in September 2014, bottomed at 43,205 bbls/d in June 2016 and have since recovered on an upward trajectory, noted analysts with GMP FirstEnergy this week.

“We would expect crude by rail volumes in 2018 to surpass what was experienced in 2016…we can see that crude by rail exports have recovered considerably since bottoming out in second quarter 2016 and are on track to exceed September 2014 volumes,” analyst Ian Gillies wrote in a research note published on Monday.

Assuming the completion of sanctioned projects including Trans Mountain in 2021, the Enbridge Line 3 replacement in 2020, an Enbridge system optimization in 2019 and throughput on Enbridge's Bakken Express Pipeline, GMP FirstEnergy predicts that an existing and increasing capacity shortfall will switch to a surplus in 2021.

“If we assume no other [pipeline] projects are sanctioned, we expect the undersupply of crude oil pipeline capacity to be approximately 250,000 bbl/d in 2018 and 2019, falling to 31,000 bbl/d in 2020.”

However, Gillies noted that these expectations do not take into consideration pipeline downtime or allocation issues.

“Currently, crude oil pipeline apportionment is also a major issue. Enbridge recently announced that the January apportionment for Lines 2 and 3 is 17 percent (December 5 percent) and 36 percent for Lines 4 and 67 (21 percent in December).”

Here’s the chart.