Two unions with the Canadian Pacific Railway have issued 72 hour strike notice.  A CPR strike could derail any recovery in the Alberta oil industry which has suffered heavy losses since the 2014 oil price crash.  CPR photo.

Teamsters, IBEW threaten CPR strike

Canadian oil producers still struggling from years of low oil prices and pipeline battles may now face another roadblock in the way of their recovery.  A CPR strike threatened by two unions could derail the recovery of embattled oil industry in Canada.

On Tuesday, the Teamsters Canada Rail Conference and the International Brotherhood of Electrical Workers each gave the rail line a 72-hour strike notice.  The unions say without an agreement, they plan to hit the picket lines at 12:01 a.m., EDT on Saturday, April 21.

“Serving a strike notice is part of the bargaining process that unions must follow if they want to be able to strike,” Canadian Pacific Chief Executive Officer Keith Creel said Wednesday.

Canadian oil producers are already facing lower values for their crude than producers in the United States.  The discount now sits at $16.60/barrel, which is down from the $30/barrel discount in February.

One of the reasons for the steep difference in prices is the lack of transportation options for Canadian crude, which has created bottlenecks for producers and stymied exports.

Last November, a leak on the Keystone pipeline in South Dakota shut down the Alberta to US line for weeks. Following repairs, shipments were restricted and the pipeline is still not operating at full capacity.

As well, Alberta and Saskatchewan are threatening to shut off oil shipments to British Columbia in retaliation for BC’s stance on the Trans Mountain pipeline expansion project.  Such a move would only increase the glut of Canadian crude. Rail companies also faced heavy demand for grain shipments and a cold winter slowed down trains.

The possible CPR strike will hit Western Canadian oil producers at a critical time, just as oil prices are rising.

“Any reduction in rail capacity would not be good,” Kevin Birn, a director at IHS Energy in Calgary, told Bloomberg. “A rail strike would stretch or constrain CP, one of the major rail lines, at a time when its most needed.”

And new production at Suncor Energy’s Fort Hills mine will only add more to the oil industry’s transportation requirements.

Chelsie Klassen, spokeswoman for the Canadian Association of Petroleum Producers, told Bloomberg that “The oil industry is concerned about any further impact on the availability of rail capacity given the tight pipeline situation and is monitoring these new market developments as they unfold.”

Keith Creel said on Wednesday that his company is “committed to achieving a win-win solution and urge the two unions to work closely with us and the federal mediators to achieve a positive outcome as soon as possible in the hours leading up to the deadline.”

In bargaining on Monday, CP says it made “significant movement” by offering Teamsters Canada new three-to-five year agreement options and the company says it will present three-year to five-year deals to the IBEW later on Wednesday.