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Canada is shipping oil one truckload at a time

SDI Logistics Co.,Ltd | Updated: Apr 26, 2018

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.