July 10, 2024

Due to continuing Alberta pipeline export capacity constraints, some Canadian oil must be transported by rail to US refineries, primarily in the US Gulf Coast (USGC) region.

Monthly crude by rail volumes fluctuate significantly over time and have averaged about 150,000 Bbl/d since 2012. Increasing supply and lack of export pipeline capacity additions led to the highs seen from 2018 to 2020. Crude by rail increased dramatically over this period averaging 270,000 Bbls/d and peaking at over 410,000 Bbls/d. Volume later dropped to 140,000 Bbl/d when new pipeline (Enbridge Line 3) capacity become available. The new line replaced an aging Line 3 and began operating in October 2021, after Enbridge completed construction.

Shipping by rail is more expensive than via pipeline and typically ranges between USD $10-$20/Bbl. However, it may be economical as Canadian oil prices are lower than in US. The US – Canadian price differential widened from US$13/Bbl in 2021 to over US$18/Bbl in 2022. The differential is expected to narrow to US$14/Bbl in 2024 following the completion of the Trans Mountain expansion.

Source: Canada Energy Regulator Canadian Crude Oil Exports by Rail – Monthly Data, 2024