Finally some good news for heavy oil, with the announcement by CN of their “Pipeline On Rail” initiave. This is especially significant for smaller producers who will now find plenty of capacity at a significantly lower price to transport their product to market.
CN says it may add up to 20000 purpose built cars to transport bitumen South to the Gulf Coast or West over the Rockies for transport to Asian markets.
Gaining access to the Asian markets of China and India is the big win here.
As the middle classes there continue to grow exponentially, strong demand for motor oils, diesel and gas and of course all the plastic parts found in consumer goods is expected to surge dramatically.
This couldn’t come at a better time for the industry whose major customer the USA is insistent on legislating a cap and trade system that would punish heavy oil producers for the higher carbon emissions vs conventional oil. In hindsight I feel this will be shown to be a major mistake on their part as their efforts to “clean up” the energy supply will lead to producers shipping to overseas customers without such stringent requirements, leading to shortages in their own country.
This initiative by CN makes so much sense that I find it difficult to understand why it hasn’t been done before.
I hope the heavy oil industry is intelligent enough to place an upgrader somewhere along the line, as finished products command higher market prices than raw goods.
All in all, excellent news for the oil sands. Shareholders, oil companies, governments and communities that rely on oil and gas jobs are clear winners here.
Admin.