Monday, April 13, 2009

CN's pipeline on rails could change the nature of oil shipments in the Northwest

CN Rail is working out the details on an ambitious plan to move Alberta oil from the Tar Sands and elsewhere to shipment points wherever their rails may go.

The Financial Post has been reviewing the plans of the railway to use insulated and heatable rail cars to move the resources of Alberta to ports whether they be in Prince Rupert, Vancouver or the southern USA.

It's a strategy that could reduce the cost of shipping oil from Alberta and make the use of costly and environmentally troublesome pipelines no longer viable.

The railroad will start the project off with small steps over the next few months with plans to move some 10,000 barrels of oil from Alberta to shipment points.

The potential for CN to ship up to four million barrels of oil a day, however is considered a major change in the distribution system and could provide for much volume for the railroad and whatever ports happen to be the home of the shipment locations.

It also could change the thinking of the recent plans to build a pipeline from Alberta to Kitimat, BC, which while still in the study phase has been receiving much attention of late.

With CN announcing their new concept of shipping the resource and reportedly at a less cost than the pipelines can provide, the prospect of the project moving quickly seems quite possible. Though you might wonder what kind of environmental concerns the railroad will be involved with, and how much infrastructure will be needed along the way to delivering on their goal of a steady flow of oil from Alberta to world markets.

For Prince Rupert, home of the western terminus of the northern route for CN Rail it will be interesting to see how this new project may impact on the local economy and if it provides for more infrastructure here in the way of a shipment terminal, or if Kitimat's port project may yet have life, with CN rebuilding their rail infrastructure to that port using it as the shipment point.

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