CP to delay 6 sidings on crude routes

OREANDA-NEWS. Canadian Pacific Railway (CP) does not plan to build six sidings this year that it had anticipated needing to speed crude traffic, which it expects to fall short of initial targets.

CP will save C\\$42mn-C\\$43mn (\\$33mn-\\$34mn) that it planned on spending on the sidings, although chief operating officer Keith Creel said yesterday that that grading and ground preparation work might move ahead to allow for quick installation next spring if market conditions improve.

Crude makes up about 7pc of CP's business. The railroad previously expected to run 200,000 carloads in 2015 but slashed that forecast to 140,000 after prices plunged last fall.

"Crude is not where we thought crude would be," Creel told attendees of the Stifel Transportation and Logistics Conference in Key Biscayne, Florida, yesterday.

The company still plans to spend about C\\$210mn on 31 new sidings and yards in its system.

Creel added that CP expects crude growth to resume in late 2015 and 2016, and that crude prices have essentially bottomed at around \\$50/bl.

Canadian Pacific operates both in the Bakken shale of the US and Canada and in the Alberta oil sands production areas. Both regions are considered to be short on pipeline capacity compared with production.