Crude-by-rail exports set new record in December, NEB says

Daniel Fowler
February 22, 2019

Notley described the plan as a "medium-term strategy" for getting crude to market, since Canada's Trans Mountain Pipeline expansion, if approved, isn't expected to be operational for at least three years.

The province estimates its rail plan will lead to a $5.9-billion increase in commercial, royalty and tax revenue for a net gain of $2.2 billion.

Notley said she expects numerous leased railcars to be painted with Alberta's logo, but details still need to be worked out.

Alberta Premier Rachel Notley says the province is spending $3.7 billion to move landlocked oil to market by rail - and it isn't counting on Ottawa to pitch in. APMC has also signed contracts to lease tank cars, and for the capacity to load crude into them.

Shipments carrying about 20,000 barrels per day are expected to begin in July.

"We are treating the safety of these rail cars as though they are traveling through our own backyards", Notley said.

The added rail shipments is projected to narrow the oil price gap by up to US$4 per barrel from the beginning of 2020 to late 2021.

She said the province had to act in order to lift prices for Canadian heavy oil, which as recently as December suffered record-setting discounts relative to US benchmarks.

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Observed Railway Age Canadian Contributing Editor David Thonas, "Bitumen-by-rail movements out of the province have essentially stopped as producers can not justify the cost of rail over pipelines when the price of competing high-quality oil is so low". "The cars we will be using will be the safest cars on the tracks".

He told reporters at a news conference Tuesday afternoon that rail contracts will go under the microscope.

The head of Canadian Pacific Railway Ltd. has voiced his displeasure at the idea of Alberta's $3.7-billion deal with Canada's two biggest rail companies to ship more crude via rail amid a pipeline crunch squeezing oilsands producers. "If elected, a United Conservative government will subject today's proposal to that value-for-money review".

Shipments of grain should not be disrupted by increased oil traffic on the railroads, Notley said.

"So the government steps in, we didn't like it at all", said Keith Creel, speaking at a conference in Miami on Wednesday.

Notley said the crude by rail plan is key to ensuring Albertans get the best return for their resources.

"We are confident that this will turn out to be a good business decision for taxpayers", she said.

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