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Market Snapshot: Crude-by-Rail Exports Decline in First Quarter 2015
Release date: 2015-06-04
In the first quarter of 2015, Canadian crude oil exported by rail averaged 120 000 barrels per day; about 39 000 barrels per day (32 per cent) less than in the previous quarter. Crude-by-rail exports reached a peak in the third quarter of 2014 and have since declined due to increased available pipeline capacity and the narrowing of price differentials between markets in Western Canada and the U.S.
Figure Source and Description
Description: This chart depicts Canadian crude oil exports by rail and the average Canadian export price of crude oil from quarter one 2012 to quarter one 2015. Canadian exports by rail are shown to steadily increase to a high in quarter three 2014 at approximately 170 000 barrels per day, decreasing over the next two quarters to the current volume of approximately 118 000 barrels per day. This chart also depicts the average Canadian export price of crude oil, which remained around $80 to $90 per barrel until quarter three 2014, and has since declined to the current price of $34 per barrel.
CAPP estimated the range of costs to transport crude by rail from Alberta to the Gulf Coast to be around $15-$22 per barrel, versus the approximate $9 per barrel toll for pipeline transportation. In the first quarter of 2015, the differential between heavy crude prices in the Gulf Coast (Maya) and in Alberta (WCS) was around $7.50 per barrel, indicating less economic viability of rail transportation in the current price environment.
The average export price of crude-by-rail shipments in the first quarter of 2015 was approximately $34 per barrel, significantly below the 2012-2014 average export price of $83 per barrel. The export price for rail was less than the average export price by pipeline of $39 per barrel in the first quarter. This reflects the higher portion that heavy oil represented in railed volumes (64 per cent) versus pipeline exports (30 per cent).
On average, over half the railed volumes of crude are exported to the U.S. East Coast and over a third are delivered to the U.S. Gulf Coast. Roughly ten per cent is shipped to the West Coast, only minor amounts to the Midwest, and practically no volumes are railed to the Rockies.
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