Browsing by Author "Yard, Bohdan"

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    Integrating Railways: An Export Strategy for Alberta Crude Oil
    (2013-10) Yard, Bohdan; Mansell, Robert
    Canada’s economy has long been resource based, but the current challenges faced by western Canada’s oil producers are unprecedented and pose a threat to continued prosperity. With the main export pipelines operating at or close to capacity and further increases in crude oil production on the way, expanded access to markets is required to avoid deep discounting of the prices received for Alberta’s crude oil production or even the possibility of shut in production. To address this issue, a number of proposals for new export pipeline capacity have been advanced. However, these have and are facing considerable opposition. The political and regulatory challenges ahead of these pipeline projects are varied, spanning concerns over potential environmental damage to Aboriginal land rights. Faced with actual and expected pipeline capacity constraints, the upstream oil industry has turned to a relatively new option—railway transit. The objective in this paper is to evaluate the potential of this option over the longer term in Canada’s oil market access and diversification goals, along with key policy issues that would need to be addressed for crude-by-rail to play an important role. The crude-by-rail expansion has taken Canadian railways by storm and appears to be a viable option in an environment of limited export pipeline capacity. Due to advantages in market reach, existing infrastructure, and a comparative advantage in heavy crude transit, railways are uniquely positioned to aid in Canada’s crude oil market diversification and export strategy. As American demand for oil imports begins to wane, it will become increasingly important for oil producers to access the rapidly growing Asian-Pacific markets. Canadian rail can provide the missing link to west coast tidewater access for crude oil exports, but not without overcoming barriers of its own. Chiefly, significant investment is needed to equip west coast port termini with rail-to-vessel unloading and the prospect of increased oil tanker traffic in coastal waters will undoubtedly face opposition. Additionally, a revitalization of railway operation regulation is needed to address risks to health, safety, and environmental damage. Nonetheless, with these initiatives undertaken, railways can be a significant component of the solution to achieving the market access and diversification required to allow the crude oil sector to remain a key driver for national and Western Canadian prosperity.