Rail cars and oil?

[Norwest Alta]

Can someone explain to me how rail cars full of oil going to the US is going to increase the price of Canadian crude? Seems to me it'll still be sold at a discounted rate or are the rail cars going to get it to a different market?

Thanks.

[curtz]

I'm not positive but I think they want to ship it to the west coast.

[Deer Hunter]

When it's in a rail car it has a different and sometimes better market.
It cost 20-25$/bbl give or take to get it in a railcar to the gulf coast where it sees real world oil pricing.
Whereas that same oil in a Canada is seeing differentials of $40+/bbl because of lack of pipeline capacity.
Rail will help add capacity and provide immediate price improvements.
But how the government is going to manage this remains to be seen.

[blgoodbrand1]

Not to derail....(that’s punny) but does anyone know the cost of this runaway train wreck?


Sent from my iPhone using Tapatalk

[Grizzly Adams]

Nice to own rail cars, but the railways still own the tracks. Just ask the farmers how that is working out.

Grizz

[Weedy1]

Originally Posted by blgoodbrand1

Not to derail....(that’s punny) but does anyone know the cost of this runaway train wreck?

I would think if Alberta ordered them from Bombardier Trudeau could come up with a plan to make them for free.

[big zeke]

Diluent is not required for shipment, this dil costs more than WTI and gets the same pricing as the deeply discounted heavy. Likewise once it's in a rail car it (theoretically) can be shipped to a port for offshore shipping at world prices.

The 7000 cars mentioned in media equates to like 68 unit trains, not sure there is that much open capacity on rails esp against seasonal shipments like grains.

A bigger concern is why are folks chasing a solution that will be many months away and full of logistical issues. A pipeline, a new one, should remain Plan A and we should stop chasing our tail cooking up this Plan B.

Has everyone forgotten that we now control TMX?

[jstubbs]

The current depressed price of WCS is largely due to pipeline capacity restraints. Crude production in Alberta is more than they can move out of Hardisty and down the pipes to the south. This is causing a supply glut, which drops the price as producers compete to sell their oil. With rail cars moving crude, it’ll reduce the supply glut, and alleviate the downward pressure on the price.

Rail does cost 2-3x more (or higher, depending on what is currently being paid for tanker rail contracts, I’m sure there is so arbitrage going on) than using a pipeline, but when the differential is $40+, the economics of it make a ton of sense.

Have to realize WCS is a spot price. It’s the price of a certain blend of crude at a certain location. Move that crude elsewhere, and it’ll fetch a different spot price (ideally a lot more).

[Scott h]

Originally Posted by big zeke

Diluent is not required for shipment, this dil costs more than WTI and gets the same pricing as the deeply discounted heavy. Likewise once it's in a rail car it (theoretically) can be shipped to a port for offshore shipping at world prices.

The 7000 cars mentioned in media equates to like 68 unit trains, not sure there is that much open capacity on rails esp against seasonal shipments like grains.

A bigger concern is why are folks chasing a solution that will be many months away and full of logistical issues. A pipeline, a new one, should remain Plan A and we should stop chasing our tail cooking up this Plan B.

Has everyone forgotten that we now control TMX?

How is plan A going so far??? People can whine and bitch and complain that there should be a pipeline built but the fact remains that it isn't and it might not be.
Kinda like the guy behind building the sturgeon refinery pointed out one time, that it might be cheaper to refine some where else, but if you can't get your product there it really doesn't matter.

[jstubbs]

AFAIK, as soon as the NEB conducts a proper environmental impact assessment and respects the Duty to Consult with affected Indigenous nations, the pipeline expansion will be full steam ahead. Who knows how long that will take, however.

[Rastus]

And "GUESS" who owns the rail cars? A friend of mine once said, the answer is money, now what is your question?

[calgarychef]

It wouldn’t surprise me one bit to see Trudeau with a stroke of the pen declare that it’s illegal to ship oil by rail.

[big zeke]

Originally Posted by Scott h

How is plan A going so far??? People can whine and bitch and complain that there should be a pipeline built but the fact remains that it isn't and it might not be.
Kinda like the guy behind building the sturgeon refinery pointed out one time, that it might be cheaper to refine some where else, but if you can't get your product there it really doesn't matter.

Rumor has it there might be some folks getting paid to obstruct the process, just a rumor mind you.

My point is, pipelines within Canada are something we control and all can benefit from. We currently forego like 15 bil/yr and yet there seems to be no appetite to fix this. The 3000 jobs lost by GM closing a plant in Ontario required swift action...Western Canada has lost like 20X as many jobs and the remedy is moving in slow motion.

Is the only way this can gain attention is by shutting off the taps east & west. I'm guessing Vancouver will be out of fuel in a day or so, no way to heat a latte!!

[elkhunter11]

It would likely take a year to build the cars and get them into service, but if the price doesn't go up a great deal , our oilsands plants will be shut down by then. They are selling oil for less than it costs to produce it, and I doubt they will continue doing that for another year.

[1899b]

Yeah let’s ship that stuff via rail. What could go wrong?? Lol

[NCC]

Not too much to go wrong railing heavy oil unless it details in a river or lake. I’m sure the flashpoint is considerably higher than the light oil which burned down Lac Magnetic (sp?)

According to one analyst who’s name I can’t recall, many of the gulf coast refineries have retooled for heavy Venezuelan oil, which is not getting delivered. Because of this, the price at the coast for heavy oil is higher than the WTI price. We just need to get it to those refineries.

[bobcatguy]

I think if the current government thinks buying rail cars is right thing to do it probably isn't. Wasn't it just last year rail shipments of grain weren't able to keep up to demand?

[Drewski Canuck]

Last year grain traffic was parked because of oil trains.

So the solution was more oil trains.....

Yeah. That should help the farmers!!!

INSTEAD there was a "NORTHERN GATEWAY LINE" all pre approved by First Nations groups, straight up to the relatively CALM and uncrowded waters of Prince Rupert. (Once you out of Chatam Sound, its open ocean. )

The advantage of Rupert is it is 56 hours closer to the Asian Markets who would buy the Crude.

But WAIT!!! There is a Great Northern Rain Forest that BM Trudeau once kayaked in so no OIL DELIVERIES FOR YOU!!!

You see, the obvious route that bypassed the busy port of Vancouver was in a region where there are few Liberal seats anyway, so lets blow 4.5 Billion fighting an uphill battle instead!!!

Drewski

[jungleboy]

7000 rail cars at a cost of a billion dollars is designed to do one thing, Make Notley look like she is somehow a champion of the oil industry .Listening to her chastise the "pipeline protesters" is laughable at best. The amount of oil that can be shipped by these magic NDP cars is a drop in the barrel compared to what a pipeline can achieve. Assuming they actually get the cars they still need the Track capacity to ship them ,along with car maintenance car storage fees, CN and CP don't do charity work.
If it costs 3 times the $$$ to get a barrel of oil to market on a train, along with the huge overhead to keep these cars ,what have we gained ? We have a Premier that is desperate for any glimmer of hope of re election and will spend any amount of money to get there This will be The NDP's very own billion dollar boondoggle

But hey what's another billion, right?

[fishtank]

Originally Posted by 1899b

Yeah let’s ship that stuff via rail. What could go wrong?? Lol

..Lac-Mégantic rail disaster

[220 Swift]

Originally Posted by blgoodbrand1

Not to derail....(that’s punny) but does anyone know the cost of this runaway train wreck?


Sent from my iPhone using Tapatalk

Unfortunately as bad as it sounds not as much as a hospital a day in lost Canadian revenue. Sure i know its not as safe as PL but short term.

[220 Swift]

Maybe it would make sense to dump the grains in the St lawrence, use the grains we need in Canada and toss the rest. This country is dependant on oil to control its economy as it Has become very obvious in the past 4 years. If the price of grain goes up or down no one even notices except the cbc and the lending institutions.

I am not here to cause a scrap. I was born and raised on mixed cattle farming operation. One thing i learned there as a young kid some times you whack things on the head that wont survive on their own. You can help them out but in the end they need to pull their own.

If Grains can compete with oil for trains , fine. The poorer grain commodities will sort them selves out by simple economics. Sadly to say, It could actually help the farmers pricing out with shortages of food in the world. I am also being seriously that some farmers shouldnt be in business either and some of the land that is farmed should not be farmed but left as grasslands.

Keep in mind oil companies are shutting in their marginal wells and fields too. So essentially oil guys are doing the whacking on the head of their potential salable product.

If its for the better of Canada every Canadian should be helping out.

[GMX]

Oil has been flowing west on rail for awhile they’ve spent over four years upgrading the bridges out to prince Rupert for heavier loads. I’m assuming it’s for oil cars heading that way their also working on storage and Terminal upgrades on Ridley island . I’ve been told the railway has different laws for transporting oil witch makes it an easy option to ship it that way.

[Scott h]

It wouldn't take to many trains loaded with bitumen going through Burnaby to get on the news (and it would very quickly) and people would be clamoring for a safer way to move it.

[.257Weatherby]

Some of the Farmers in the flat lands are having a hard time getting their crops to the waiting ships.
How does one propose to get the bitumen to the waiting ships when the rail lines are screwing regular waiting customers?
I say fill your boots Ms.Notley and build a refinery.
Rob

[sjr]

Originally Posted by calgarychef

It wouldn’t surprise me one bit to see Trudeau with a stroke of the pen declare that it’s illegal to ship oil by rail.

Nothing would surprise me what that Drama Queen Justin our dear PM would do or say these days

[Scott h]

Originally Posted by .257Weatherby

Some of the Farmers in the flat lands are having a hard time getting their crops to the waiting ships.
How does one propose to get the bitumen to the waiting ships when the rail lines are screwing regular waiting customers?
I say fill your boots Ms.Notley and build a refinery.
Rob

From what I understand the new Northwest Refinery seems to be doing pretty darn good.

[cdmc]

Alberta can build and ship as many cars as they want but the railcar mafia does what they please.
I work in an industry that CN is continuinly 1 week late for either a spot or pull service.
CN is better than CP.

[dgrimard]

The answer is north for both rail and pipelines, to Norman Wells or Hay River even. then out from there. N.W.T. got the short end of the stick with the diamond mines when they split with Nunavut. Think of the good it would do for the territory and the jobs and people. Every one is hung up on B.C. but we have many other miles of coast line to build ports.

I say fine take your ball and go we will figure it out, with out you.

[Kim473]

Originally Posted by Weedy1

I would think if Alberta ordered them from Bombardier Trudeau could come up with a plan to make them for free.

I hear that a old car plant is going to be available soon. Comes with 2500 workers. They should be able to run a couple hundred train cars a day through it.