The Alberta government says it is in talks to purchase oil cars to transport 120,000 barrels per day of crude. Premier Rachel Notley says her government is taking the step to help clear up the pipeline bottlenecks which have significantly cut the price of Canadian crude.
Purchase of rail cars would clear up current amount of stranded supply
Alberta Premier Rachel Notley says her government is in talks to purchase rail cars to ship 120,000 barrels per day of crude oil. Notley says the deal should conclude within weeks.
Rising production in the oil sands along with stifled pipeline projects have resulted in stranded oil and slumping prices for Alberta crude. The 120,000 b/d of extra shipping capacity is nearly equal to the current amount of stranded crude.
According to Reuters, Notley told a business audience that she was disappointed that the Trudeau government was not going to help fund the purchase.
The one-time capital cost of the two unit trains is about $350 million. The federal government says that by the time the rail cars come on line late next year, supply problems will have eased.
“Alberta will buy the rail cars ourselves to move this oil … we have already engaged a third-party to negotiate and work is well underway. We anticipate conclusion of the deal within weeks,” Reuters reports Notley said in the prepared text of her speech.
She added that the cost of buying the rail cars would be fully recouped through royalties and selling of shipping capacity.
Last week, Premier Notley said Alberta would purchase the rail cars even if Ottawa didn’t want to split the costs. She said there was “no excuse” for the federal government to not assist Alberta. Notley also said the Trudeau government’s tougher environmental standards would make it harder than ever to build pipelines.
The crude glut “is happening because Canada willfully holds Alberta’s economy and Canada’s economy hostage,” said Notley. Alberta estimates the losses amount to $80 million a day.
Meanwhile, Ottawa denies Notley’s claims, adding they bought the Trans Mountain pipeline earlier this year.