Though solid numbers are not available, industry sources say upward of 80,000 barrels a day of Canadian oil is now moving to market on rail cars. It's a small fraction of the 2.3 million barrels a day the country exports, overwhelmingly by pipeline. But rail is rising fast: last year at this time, some 5,000 barrels a day left Alberta on trains. By next year, executives, oil producers and energy traders estimate it will exceed 200,000 barrels a day.
The rise of rail comes as the industry scrambles to gain better prices for Canadian oil, which has suffered deep discounts because of overstuffed pipelines and over-supplied U.S. Midwest markets. A new pipeline takes years to build, but with rail, an oil company can send product to new markets in days with portable train-loading equipment. The new destinations that companies are now accessing - the Gulf Coast, U.S. Northeast, California and Central and Eastern Canada - offer better prices that are directly boosting profits in Alberta.
But the speed of industry's embrace of rail, which is set to move as much next year as a mid-sized pipeline, also suggests a much broader shift is under way. As more oil moves on trains, it stands to supplant the need for new pipelines, whose construction has grown increasingly difficult.
