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Pipeline Shortage Leads To Surge In Canadian Oil-by-Rail Exports

Canadian crude oil exports transported by rail soared by 87 percent on the month in November as producers had little else to do given the now chronic shortage of pipeline capacity in the country.

The daily average of Canadian crude shipped by rail stood at 173,000 bpd, CBC reported, which was lower than the average for November 2019 but considerably higher than the October average, which stood at 92,800 bpd.

The increase was the result of higher oil production in Alberta despite the pandemic. Total Canadian oil imports in November hit 3.74 million bpd, up by close to 5 percent from October.

Meanwhile, the newly elected U.S. president has got off to a strong start with his climate agenda, killing the Keystone XL pipeline project on the first day of his presidency. Keystone XL was one of just two pipeline projects that could relieve the pressure on local oil producers, so it was no wonder the Albertan Premier, Jason Kenney, lashed out at President Joe Biden, calling the Keystone XL executive order a gut punch.

“This is a gut punch to the Alberta and Canadian economies,” Jason Kenney told a news conference last week. “It’s an insult.”

Canceling Keystone XL, he said, “would kill jobs on both sides of the border, weaken the critically important Canada-U.S. relationship, and undermine U.S. national security by making the United States more dependent on OPEC oil imports in the future.”  

“As president-elect Biden’s green jobs plan acknowledges, Americans will consume millions of barrels of oil per day for years to come. It is in perfect keeping with his plan that the United States energy needs should be met by a country that takes the challenges of climate change seriously,” the Alberta Premier added.

Indeed many observers have commented that the death of Keystone XL will not reduce U.S. demand for heavy crude. Refiners would just have to ship it in by rail, which is both costlier and riskier than pipeline transportation.

By Irina Slav for Oilprice.com

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