Crude oil exports by rail plunge as economic slump frees pipeline space

Canadian exports of crude oil 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 barrels per day, down from 156,000 bpd in April and 351,000 bpd in March.

Shipments reached a record high of 412,000 bpd 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 barrels per day 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 barrels of oil per day in April than its average of 2.84 million bpd in the first quarter.

This report by The Canadian Press was first published June 19, 2020.