The extension of the Trans Mountain pipeline, which has tripled its transport capacity to 890,000 barrels per day (bpd), enables Canada to maintain its oil exports to the United States, even in the event of major disruptions to rail networks.
This increased capacity is essential in a context where Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) could cease operations due to an impending strike.
While crude oil transport by rail has declined in recent years, the pipeline infrastructure efficiently absorbs the flow of oil, reducing the risk of disruption to the industry.
Crude oil exports by rail fell to their lowest level since 2020, averaging 55,000 bpd in May.
This reflects a reduced reliance on rail transport for crude, making the potential impact of a strike less of a concern for operators.
The market remains stable, with Western Canadian Select (WCS) prices showing narrow spreads over West Texas Intermediate (WTI), a sign that market players are confident in the robustness of existing infrastructures.
Sector reactions and risk management
Energy companies such as Cenovus Energy and ConocoPhillips Canada have anticipated potential disruptions by putting contingency plans in place to ensure continuity of operations.
The stability of prices, with a spread of just $12.25 per barrel for WCS in September, reflects this preparation and the sector’s ability to adapt quickly to change.
At the same time, the maintenance of US refineries in the Midwest, the main outlet for Canadian oil, is helping to free up pipeline capacity, enabling additional volumes to be handled efficiently.
This logistical flexibility, combined with Trans Mountain’s increased capacity, ensures the relative stability of the Canadian oil market, even in the face of a rail crisis.
Implications for Refined Products and the Rail Sector
The propane sector, which relies heavily on rail for deliveries, could be hardest hit in the event of a prolonged strike.
AltaGas, operator of the Ridley Island Propane Export Terminal in British Columbia, has already stockpiled reserves to offset potential delays.
Diesel refineries in Alberta, such as Imperial Oil and Suncor Energy, have also put strategies in place to avoid any disruption to their supply chains. The gasoline market, mainly served by pipelines, should remain stable, even if rail operations are disrupted.
This situation highlights the strategic importance of pipelines in maintaining energy flows, reducing the sector’s vulnerability to logistical crises.
