https://edmontonjournal.com/news/politics/notley-promises-new-rail-cars-to-ship-oil-slams-ottawa-for-failing-to-step-up
[In Canada, using $4.5 Billion taxpayer dollars to buy an oil pipeline
which is operating well past its best-before date, and now to augment
that by using taxpayer dollars to buy new rail cars for shipping diluted
bitumen, and using taxpayer dollars to buy a new fleet of instantly
obsolete spill response vessels and equipment although the oil industry
had agreed to shoulder those costs (they own the companies which will
use the equipment) apparently fits the government's definition of
eliminating subsidies to the fossil fuel industry per their agreement at
the G7 in 2009. Almost a decade later, Canada is pouring more taxpayer
money into this century's version of the buggy whip, and our national
GHG emissions continue to rise, contrary to the wishes of Canadians
according to polls oave a period of years. Sigh.
video and audio clip in online article]
Notley promises new rail cars to ship oil as Kenney calls for
government-imposed production cuts
Clare Clancy
Updated: November 28, 2018
Alberta’s political leaders are pushing different plans to combat the
oil price differential clobbering energy producers, with Premier Rachel
Notley opting for crude-by-rail and Opposition leader Jason Kenney
championing mandatory industry cuts.
“We need the federal government at the table, treating it like the
crisis it is,” said Notley Wednesday in a speech she delivered at the
Canadian Club of Ottawa.
She announced Alberta will buy trains to move an an additional 120,000
barrels per day out of the province, starting late 2019. The full
complement of rail cars would ship out in 2020.
Notley had asked Prime Minister Justin Trudeau to boost rail capacity to
provide relief, but the federal finance minister hinted that Ottawa was
leaning away from that option.
Minister Bill Morneau, who was in Calgary Tuesday, said it would take at
least nine months to increase rail capacity, though didn’t flat-out
reject the idea.
$80 million a day
The price differential between Western Canadian Select and West Texas
Intermediate has fluctuated in recent weeks, peaking at around $45 a barrel.
The province pegs the losses at around $80 million per day [bogus number
- assumes worst case on all facets and ignores long-term contracts at
higher prices], though estimates vary. The Canadian Association of
Petroleum Producers estimated that the oil differential cost Canada at
least $13 billion in the first 10 months of 2018.
Crude-by-rail shipments already increased to a record in September —
nearly 270,000 bpd — but the differential continued to grow. [Duh,
increasing production of an inferior product to a market which sees
bargains in a superior product available is not going to lift the price.]
‘Stop the bleeding’
UCP Leader Jason Kenney called for 10 per cent government-mandated
production cuts across the board to curb the oil glut. [If industry
wants a production cut, then industry should figure how to implement it.
OPEC can do it.]
“Now we are virtually giving away … our oil and gas,” he said at a
Wednesday news conference. [So, stop doing that.]
His views as a free market conservative have changed in the last two
weeks, he said.
“I believe government intervention in markets should generally be
avoided, which is why I was initially opposed to the idea,” he said.
“Voluntary production cuts are not sufficient to stop the bleeding.”
Kenney said the crude-by-rail proposal isn’t an immediate solution,
taking a similar position to the Alberta Party.
“The premier is talking about (buying) rail cars, which is maybe a
solution … a year from now,” said Alberta Party house leader Greg Clark.
“They’re scrambling.”
He added his party called for mandatory oil curtailment 11 days ago —
“I’m glad to see Jason Kenney finally joined the party.”
Legislative changes
Kenney outlined a plan Wednesday that included amending the Mines and
Minerals Act before the end of the fall sitting, slated to finish next
week. He said by defining crude bitumen as petroleum under the
legislation, Cabinet could then use its authority to reduce production
by about 400,000 barrels per day.
He also said curtailment regulations should include a one-year sunset
clause.
Clark said he’s not sure amendments to legislation are necessary.
Earlier this month, the province told Postmedia that instituting a quota
system would be complicated due to free trade agreements and integrated
oilsands operations.
Alberta Energy Minister Marg McCuaig-Boyd said industry players are
“extremely divided” on production cuts and wouldn’t say whether the NDP
will consider a legislative change.
The province hasn’t closed the doors on any good ideas, she told
reporters Wednesday.
Cenovus Energy Inc. CEO Alex Pourbaix said the public investment in rail
cars is encouraging.
“However, it will likely take at least a year for these new rail cars to
fully come online,” he said in a statement.
Pourbaix said a “growing chorus of voices” have joined Cenovus in
calling for temporary mandatory production cuts as a short-term solution.
Crude-by-rail negotiations underway
The Alberta Petroleum Marketing Commission (APMC) is negotiating with
rail manufacturers and suppliers, and financial details of a deal won’t
be released during talks, said a government news release.
The added rail shipments would narrow the oil price gap by up to $4 per
barrel. The plan wouldn’t affect agricultural products as there would be
no added competition for space on existing trains, said the release.
[Umm, this seems unlikely, there are still reports of grain stuck in
storage in the prairies because they can't get rail capacity to move it.
So increasing demand for rail capacity will also likely lead to calls
for government subsidies the rail carriers to increase track capacity
and upgrade lines to allow trains to move at higher speeds and carry
more cars per train.]
“With the current pipeline construction schedule, this investment would
be revenue neutral,” it said, noting a minimum three-year contract.
Notley, who is also slated to speak in Toronto Thursday, isn’t scheduled
to meet with Trudeau during her Ontario trip.
