Thursday, December 18, 2014

Canadian Pacific to increase oil shipments by 67 percent in 2015

Canadian Pacific railway is positioned to increase crude shipments by at least 67 percent in 2015 as oil producers and pipeline companies continue to build terminals even amid a bear market for the commodity.

"From the intelligence we get from our customers that are buying the crude, I don’t think the bottom is going to drop out" of the business, said COO Keith Creel. "Will it slow down and will some consolidation happen? Yes, but I think our supply partners are in a position of strength."

Creel’s verification of the railroad’s intention to increase crude carloads to 200,000 in 2015 from approximately 120,000 this year is occurring as crude futures in New York dropped below $55 a barrel today for the first time in five years.

While crude demand will likely "level off" at some point, Creel said Canadian Pacific’s targets for 2015 are conservative because they’re based on actual demand.

"We weren’t aggressive, so that allows me to sleep better at night," he said. "If I thought they were aggressive assumptions I might be a little bit more nervous. I’m certainly aware of what’s going on but I’m not losing any sleep over it."

Canadian Pacific is also shifting its source of crude. Western Canadian crude will probably account for 60 percent of the company’s oil revenue in 2015, and North Dakota’s Bakken crude will making up the rest, Creel said.

For more of the Bloomberg story: www.bloomberg.com



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