G-S Warns Investors About Tar Sands By Rail, Invests In Tar Sands By Rail
EDIT
In addition to underestimating rail capacity (while owning a significant part of a company building that capacity), the Goldman report gave price estimates for Western Canadian Select (WCS), the industry name for tar sands oil blends. The report predicts a base-case scenario of WCS at $64 per barrel in 2014 and worst case (bear) price of $50 per barrel and a best case (bull) of $72.80 per barrel. These lower estimates for 2014 versus 2013 were based on there not being enough pipeline and rail capacity to move all of the tar sands oil being produced.
According to an Aug. 14th Alberta government report, Goldman missed that estimate by quite a bit as well. However, once again the end result is in their favor — WCS was priced at $86.56 in June of 2014 versus $75.39 in June of 2013.
Another interesting development is that customers are signing multi-year contracts to move oil by rail indicating they believe rail is going to be a competitive way to move tar sands oil in the future. In the filing for their initial public offering for this new oil-by-rail company, the company reveals that contracts signed with seven companies who have purchased all of their current loading capacity are for six years.
When companies like Goldman Sachs are investing in tar sands-by-rail facilities and taking part in an initial public offering so that any investor can get a piece of the action, it is clear that rail is no longer a stop gap measure in the tar sands industry, but an economically viable and flexible option.
EDIT
http://www.desmogblog.com/2014/09/09/goldman-sachs-warns-investors-about-tar-sands-rail-challenges-while-investing-tar-sands-rail
