Irving Oil's western crude rail plan deemed innovative
Anaylst says competitors will be watching
A petroleum analyst says Irving Oil's competitors will be anxious to see how the company makes out with tapping western crude supplies by train.
Western oil in North America is 30 per cent cheaper than Brent crude from the North Sea, but industries in this region have never been able to access the market until now.
Irving recently received a test train of 104 tank cars from North Dakota, and is upgrading its East Saint John terminal to receive future rail deliveries.
Roger McKnight, an analyst with En-Pro International, says it’s an innovative approach to save money in a tough market for refiners.
"They're a forerunner and I believe their competition is going to be watching this very closely," he said.
"As will Enbridge, who are considering reversing a pipeline to get product into the Sarnia area and Montreal, and into Saint John.
"So if the rail option works, maybe the pipeline option won't work," McKnight said.
Irving Oil officials declined an interview, or to even discuss the content of the rail cars that will be arriving at the new terminal, located at the end of the Causeway, on Bayside Drive.
But spokeswoman Carolyn Van der Veen said in an email the rail expansion will improve Irving’s "ability to receive and deliver product.
"Like any other refiner in eastern Canada, we encourage the availability of crude from other sources, including western crude," she had said.
Some preliminary estimates suggest Irving could save as much as $30,000 per tank car in raw product costs.
Clean air activist Gordon Dalzell has voiced concerns about the lack of an environmental impact assessment for the project and the "lack of openness and transparency."
He worries about the possibility of accidental spills and release of emissions and has called for the project to halt pending more information and an assessment.