Rail deal opens oil route to Louisiana after Keystone cancellation


A $25 billion deal between Canadian Pacific Railway Ltd. and Kansas City Southern offers new hope for expanded access to the Gulf Coast for Canadian oil producers that have struggled to reach heavy oil markets in Louisiana and Texas, according to the Financial Post.

Canadian oil and gas companies have for years tried to expand their options to ship heavy oil from Alberta to the Gulf Coast, but their efforts to reach the world’s largest concentration of heavy oil refineries have been repeatedly challenged. Most recently, President Biden cancelled permits for the Keystone XL pipeline.

CP Rail’s deal with KCS looks promising. Currently, only Canadian National Railway Co. offers a direct route for oil producers to ship crude from Alberta to the U.S. Gulf Coast, but the combined CP/KCS railway network could introduce some competition among the railways.

The CP and KCS rail networks currently connect in Kansas City, from which point the KCS rail line offers direct connection to heavy oil markets in Louisiana (Shreveport, Baton Rouge and New Orleans) and Texas (Beaumont, Port Arthur, Houston and Corpus Christi). See the full story.