| TORONTO, April 22
TORONTO, April 22 Oil companies are increasingly
investing in transporting crude by railway, Canadian National
Railway said on Monday, with growing demand expected to bolster
earnings in coming years.
Canada's biggest railway operator, which saw its
crude-by-rail revenue jump 300 percent in the first quarter,
said that what had begun as smaller players building smaller
terminals has turned into something bigger.
"We have a number of larger-scale refineries or integrated
producers with which we are having dialog as we speak," Chief
Executive Claude Mongeau said in a conference call on the firm's
latest earnings, which took a big hit due to extreme winter
Crude shipments are now the fastest-growing product for
several big Canadian and U.S. Class 1 railroads after oil output
expanded more quickly than pipeline capacity.
Railroads allow producers to take advantage of a temporary
oil price differential by moving crude from inland oil fields to
coastal refineries that pay higher prices linked to Brent crude.
Pipelines are either full, or don't reach these refineries.
CN, which announced it would be opening new terminals in the
U.S. Gulf and Western Canada in coming months, said that rail
transportation would complement existing pipelines.
"A number of people in the U.S. Gulf on our CN line are
investing into receiving facilities. More and more players are
looking at going the way of unit trains," said CN's chief
marketing officer, Jean-Jacques Ruest.
"So this is just still picking up momentum from one quarter
Shipments of crude by rail in the United States have surged
to an estimated 340,000 bpd in 2012 from around 11,000 barrels
per day in 2007, according to data from the Association of
If rail shipments in Canada are added, the volume could top
400,000 bpd, more than 4 percent of North American crude
production and equal to a new, large pipeline.