​Crude-by-rail exports fall to four-year low as economic slump frees pipeline space

Crude-by-rail rack Image: Northern Platforms Ltd.

Canadian exports of crude-by-rail plunged by 63 per cent in May compared with April as North American fuel demand dropped due to measures taken to control the COVID-19 pandemic.

The Canada Energy Regulator says rail shipments of oil in May fell to a four-year low of about 58,000 bbls/d, down from 156,000 bbls/d in April and 351,000 bbls/d in March.

Shipments reached a record high of 412,000 bbls/d in February.

Rail transportation of crude oil is considered to be more expensive than shipping by pipeline so shippers tend to use it only when pipelines are full or if the destination market offers much higher prices than can be achieved in Canada.

Western Canadian producers shut down more than 800,000 bbls/d of oil production at times in the past few months to avoid selling at low prices, thus freeing up space on export pipelines.

In May, Enbridge Inc. reported that its Mainline oil export pipeline system, which is typically oversubscribed by shippers, transported 400,000 fewer bbls/d in April than its average of 2.84 million bbls/d in the first quarter.

© 2020 The Canadian Press

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