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Keystone XL’s Death Sparks Rush to Ship Oil-Sands Crude by Rail

CommoditiesFeb 23, 2021 07:36PM ET
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© Bloomberg. GASCOYNE, ND - OCTOBER 14: Miles of unused pipe, prepared for the proposed Keystone XL pipeline, sit in a lot on October 14, 2014 outside Gascoyne, North Dakota. (Photo by Andrew Burton/Getty Images) Photographer: Andrew Burton/Getty Images North America

(Bloomberg) -- U.S. President Joe Biden’s decision to cancel the Keystone XL pipeline is sparking renewed interest in shipping Canadian oil-sands crude by rail, and that comes with its own environmental risks.

Cenovus Energy (NYSE:CVE) Inc. and Imperial Oil (NYSE:IMO) Ltd. have increasingly turned to trains to move their crude, with oil exports by rail from Canada more than tripling since July. Now, Gibson Energy (TSX:GEI) Inc. -- an oil shipping company that signed a 10-year contract with ConocoPhillips (NYSE:COP) to process oil-sands crude before loading it at its train terminal -- expects other producers to follow suit.

Without Keystone XL, which was scheduled to enter service in 2023, rail is poised to become a more important way for Canadian oil to reach U.S. Gulf Coast refineries, which need the heavy crude to replace declining supplies from Mexico and Venezuela. That means the risk of derailments may also rise.

“Those U.S. refineries need that heavy crude oil produced by Canada,” Sean Brown, Calgary-based Gibson’s chief financial officer, said in a conference call Tuesday. “Discussions continue to heat up.”

Gibson expects that by the third or fourth quarter it will start a 50,000-barrel-a-day facility that will maximize the crude content in rail shipments by removing diluent used to move the crude through pipelines to its terminal in Hardisty, Alberta.

Plans for other diluent recovery units, or DRUs, are also emerging.

©2021 Bloomberg L.P.

Keystone XL’s Death Sparks Rush to Ship Oil-Sands Crude by Rail
 

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Comments (3)
Maximus Maximus
Maximus Maximus Feb 23, 2021 11:46PM ET
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Shale has no future, let it die
Roger Miller
Roger Miller Feb 23, 2021 11:46PM ET
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All depends on the price per barrel. Biden restricting drilling on Fed lands could eliminate cheaper oil, reducing supply and pushing up the price. Adavances in technology also lower the the costs, this is what made both shale and the oil sands possible.
Tyler Phillils
Tyler Phillils Feb 23, 2021 9:13PM ET
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More expense, more danger to human health and to the enviornment. This is what government intervention into economics is. If you want to know what government intervention looks like take a look at Texas right now.
Mo BeeLee
MoBeeLee Feb 23, 2021 8:36PM ET
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Cognitive Dissonance doesn't seem to affect the government's thought process like it does any rational US citizen's. SMH
 
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