<article><p class="lead">A Canadian heavy crude-by-rail revival may be on tap in 2017 as exports averaged a record 2.26mn b/d this year, topping the 2.21mn b/d in potential takeaway capacity on the country's four major pipeline systems.</p><p>The Enbridge Mainline system — whose Line 4 and Line 67 have 1.6mn b/d of combined capacity geared exclusively to move heavy crude from Alberta to the US midcontinent and beyond — has gradually grown more apportioned in recent months after running almost at parity with demand this spring. The call on Kinder Morgan's 300,000 b/d Trans Mountain pipeline to the Pacific coast has been steadier at around 20pc for the last four months but up from just 1pc in July.</p><p>The industry group the Canadian Association of Petroleum Producers (CAPP) forecasts oil sands heavy crude production will rise by nearly 300,000 b/d in each of the next two years, to 2.54mn b/d in 2017 and 2.84mn b/d in 2018, and no chance of any of the proposed takeaway expansion projects on line by then.</p><p>"I think this may be the first real [structural] apportionment of my career," said John Zahary, a Canadian upstream veteran and chief executive of crude-by-rail terminal company Altex Energy. "We have talked at different times about apportionment, but not many people have ever had to shut in oil."</p><p>That could benefit rail, the only other way to move material volumes of heavy crude out of the region. The three largest heavy crude loading terminals are the 210,000 b/d facility owned by<b></b>Kinder Morgan and ExxonMobil-controlled Imperial Oil at Edmonton, Alberta; USD Group and Gibson Energy's 140,000 b/d terminal at Hardisty, Alberta; and Altex's 88,000 b/d terminal at Lashburn, Saskatchewan. </p><p>A host of smaller terminals across Alberta and Saskatchewan also are available, as well as the 70,000 b/d facility at Kerrobert, Saskatchewan, that Plains All American Pipeline mothballed soon after opening this year.</p><p>The crude-by-rail renaissance has not happened yet. Canada exported only about 69,000 b/d by rail in September, the highest level since May despite being down by 91,000 b/d year-over –year. Volumes peaked at 179,000 b/d in September 2014 and were consistently in the mid-100,000 b/d range from May 2013 until January 2015, when Enbridge increased heavy takeaway capacity by 120,000 b/d.</p><p>Gibson believes its crude car fleet soon will see more action as more long-ago commissioned oil sands projects, such as the Suncor-operated 180,000 b/d Fort Hills mine set to start operations in a year, come on stream. </p><p>"We anticipate a continued tightening of export pipeline capacity downstream of Hardisty, in particular, as we see continued growth in oil sands projects," chief executive Stu Hanlon said recently on a conference call.</p><p>Recent anecdotal evidence points to growing utilization. Canadian National — whose crude franchise is rooted in western Canada — reported three straight weeks of more than 5,500 petroleum carloads in November, the first time that had happened since March 2015.</p></article>
