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“While this represents a setback for the Enbridge Line 3 pipeline, we do not waver in our confidence that this project will be completed,” Michael McKinnon, a spokesman for Alberta’s energy ministry, said in an emailed statement. “As we lead the charge for pipelines, this kind of uncertainty is exactly why we have a plan to move more oil by rail until new pipelines are built.”

Alberta announced a plan last month to invest $3.7 billion to lease 4,400 rail cars, buy crude from local producers and sell it to refiners across North America. The government expects to turn a $2.2 billion profit on the plan through service revenue and increased royalties.

Production Cuts

The government last year announced that it would require producers to cut about 325,000 barrels of daily production, roughly 9 per cent of the province’s output, to drawn down storage tanks that filled up as new oilsands projects came online.

The plan was for the government to dial back the production cuts as the year went on and more rail capacity became available, then end them entirely when Line 3 went into service. With the Line 3 project delayed, rail shipping becomes even more critical.

Still, rail is a more expensive method of transporting crude than pipelines, and Canadian producers had been eagerly awaiting the Line 3 startup this year. The project, previously slated to start shipping crude in the fourth quarter of this year, is now expected to enter service in the second half of 2020, Calgary-based Enbridge said Friday. Shares in Enbridge shares fell 6 per cent on Monday after disclosing the delay. Shares fell to $46.54 apiece.