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FULL pipelines and rail car and truck
driver shortages are hindering the movement of oil out of Canada and
across the US border despite a rise in production.
Crude exports from Canada by road nearly tripled from 2015 to 2017, and
continued to rise in the first two months of 2018, according to StatsCan
data.
But a truck can only carry 200 barrels of oil, compared with 60,000
barrels in one unit train, or 600,000 per day by pipeline - the
equivalent of 3,000 trucks.
Moving crude by truck is at least 10 times more expensive on a mile-for-mile basis compared with rail or pipeline.
Some oil producers are feeling the heat from customers. Alberta-based
Gear Energy pumps 7,500 barrels of oil per day, and recently had an
Asian customer walk away from a deal to purchase crude after failing to
secure a method to ship the oil to the west coast, reported Reuters.
"We've never had more inbound calls looking for heavy oil," said Gear
CEO Ingram Gilmore. "And we have never had more challenges actually
getting it to them. It is very frustrating."
Production in Canada rose eight per cent in the last year to a record
4.2 million barrels per day (bpd) and is forecast to continue rising.
Over the next five years, OPEC production is forecast to only grow
modestly, leaving the bulk of forecasted global supply increases to the
United States and Canada.
However, Canada's oil industry faces significant challenges, not the
least of which are high production costs, remote oil fields and, perhaps
most pressing, shipping bottlenecks.
No easy solution is in sight. Plans for new export pipelines are facing
opposition from environmentalists, Indian bands and rival provinces.
Most recently, Kinder Morgan Canada shelved its planned Trans Mountain
expansion, and Transcend Corp has not yet fully committed to its
Keystone XL project.
Frustrated and fearful of missing out on the rebound in prices, drillers
are increasingly relying on trucks to move oil to the market.
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