Alberta to buy its own rail cars to ship oil

A plan for Canada’s energy industry Debate has started over whether Alberta should increase demand or cut supply to raise the price of its oil. CTV Edmonton’s Bill Fortier reports.

During a speech in Ottawa on Wednesday morning, Premier Rachel Notley outlined the province’s plans to get Alberta oil to market.

“Until pipelines are built we need to move more oil by rail,” she said. The province is working on a deal to purchase its own rail cars.  “We’re talking about buying and building and contracting new ones.”

Shipping Alberta’s oil is the provincial government’s plan to combat what many describe as a ‘crisis’ with the oil price differential.

“Just yesterday, West Texas Intermediate Crude was trading at $52. Brent Crude was trading at $61. And Western Canadian Select, the oil we produce in Canada, was back around $10. Why? ‘Cause we can’t get it together to find a way to get it to the market,” Notley said.

Notley said the plan may not be popular with those in opposition to pipelines, but that it’s necessary with Canada’s economy losing about $80 million dollars a day. “As they fight safer, cheaper, less emissions intensive ways to move our resources what they are doing is driving more oil to rail. In fact, we are already moving record amounts of crude by rail,” she said.

United Conservative Leader Jason Kenney supports the idea but said it doesn’t address the immediate problem and is calling for an immediate 10 per cent cut to oil production.

“Curtailed production would lead to higher prices and cash flow allowing many companies to avoid layoffs and deep cuts to their capital budgets in 2019,” he said.

Greg Clark of the Alberta Party also supports shipping oil to market via rail, but said it’s a move that has raised a number of concerns.

“The Premier’s talking about building rail cars which is maybe a solution, maybe a year from now. If that step is going to be taken how pessimistic are they about pipelines? I’m very worried. If the Premier is saying a year from now we’re going to build railcars to bridge pipelines when’s the pipeline going to be built? Ever? That’s a real concern,” Clark said.

Notley is asking the federal government for support with its rail plan. “We need the federal government at the table treating this like the crisis it is,” she said.

According to the premier, a rail deal is already in the works and is expected it will be finalized in late 2018 or early 2019.