Thursday, April 09, 2009

CN eyes “Pipeline on Rail” for oil sands production

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Canadian National has developed a "Pipeline on Rail" strategy that the company says could move oil-sands production quickly and cheaply to markets in North America or Asia. CN believes it can offer a price-competitive alternative to conventional pipelines shipping oil from Alberta to the U.S. Gulf Coast. Increasing pipeline capacity could cost considerable time and money, making the CN alternative even more competitive, the company says.

CN said that by the end of this year, it will be shipping 10,000 barrels daily from producers whose reserves are now stranded.


"Not enough pipeline capacity exists today to move bitumen (viscous oil-sands production), diluted bitumen, or synthetic crude," said Jim Foote, CN executive vice president of sales and marketing. "We can get their products today to market using the concept of a pipeline on rail and move it directly either into the U.S. or to the West Coast (for export to Asian markets), which creates the flexibility. It means smaller producers are not just tied to a refinery down in Texas."

CN recently acquired the Athabasca Northern Railway linking Edmonton to Fort McMurray, Alta., to tap the oil-sands market more fully. CN plans to deliver the oil-sands production through the use of insulated and heatable railcars or by reducing its viscosity by mixing it with condensates or diluents.

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