Alberta buying its own rail cars to move oil without feds, Notley says

Alberta Premier Rachel Notley said the province’s plan to purchase additional rail cars to move oil will not hurt other industries.

The plan aimed at bringing oil to market will see crude-by-rail shipments increase by more than 30 per cent from current levels, but Notley stresses that it will not disrupt rail shipping for other industries.

“What we are talking about doing is buying more cars and more locomotives. We’re not talking about trying to disrupt other products,” Notley told reporters after giving a speech before the Toronto Regional Board of Trade on Thursday.

“We are told there is enough track capacity to accommodate additional cars and additional locomotives, so it shouldn’t have a significant impact.”

During her speech, Notley urged business leaders to support new oil pipelines and reiterated her call for improvements to proposed federal legislation that she says creates additional uncertainty for Alberta.

But the premier stopped short of promising to mandate production cuts, something some industry executives and politicians have advocated for in recent days. United Conservative Party (UCP) leader Jason Kenney on Wednesday called on the province to mandate a 10 per cent production cut to assist in reducing supply.

“We’ve been meeting with industry officials… and we’re trying to dig in to find the best resolution,” Notley told reporters. “You can expect an announcement from us very soon. It is complex. The nature of the industry is more complex than it once was.”

A supply glut in Alberta has seen Canadian oil prices slip to record-low levels, with Western Canada Select selling for $40 a barrel less than other producers. Notley called the situation a “crisis” and urged immediate action “to shore up the waning investor confidence that is so fundamentally important to Canada’s energy industry and the economy.”

The situation has prompted the Alberta government to purchase about 80 locomotives and 7,000 cars that will help move an additional 120,000 barrels per day to market. Notley said Thursday that the rail plan would increased the current record-level shipments of crude-by-rail by more than 30 per cent, narrowing the oil price gap by about $4 a barrel. The province is currently negotiating with a third party to purchase the cars, and Notley expects the deal will close “within weeks.”

But Notley stressed that shipping more oil by rail is only a short-to-medium term solution.

“New pipelines are the long-term answer,” she said. “More upgrading and refining is the long-term answer.”

Notley said the oil price differential is costing the Canadian economy $80 million a day, up from $40 million a day during the same time last year.

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