Saturday , February 27 2021

Varcoe: Alberta grows as Ottawa waves on oil-by-rail scheme

Bill Morneau is not on board Rachel Notley's oil-by-rail scheme to boost raw sales companies out of Alberta.

But the federal finance minister did not rule out the idea completely on Tuesday as a short-term way of mitigating the reduction in prices that prevent Canadian oil producers.

The province grows a test waiting for a reply.

Alberta's headteacher recently asked the Trudeau government to consider helping to buy cars and railway locomotives in an attempt to increase the amount of waste moving from outside the province by train as the existing pipelines are hanged.

Morneau seems to reject the idea last weekend, saying he would take at least nine months to implement such a plan.

Speaking during and after the Calgary Chamber of Commerce lunch, Morneau was asked several times on Tuesday if the federal government would raise money for better rail options.

As First Minister, Justin Trudeau, during his visit to Calgary last week, avoided a direct response from the finance minister, referring to the wider point that Ottawa wants to see its expansion of the construction of the Trans Mountain pipeline.

"We do not want to divert our resources to ideas that will not have an important impact," said Morneau at one point.

Speaking to correspondents later, the finance minister left the door open to consider the concept, but only rarely.

"I know this industry and the provincial government talks about other ideas that may have a short and medium term advantage," he said.

"We will be a member of a team in trying to make sure that we are considering all the opportunities and what would be the appropriate federal role."

Well, a member of the team, he is currently getting access to the checkbook if Ottawa really wants to go to the price difference.


In the provincial legislature, the Alberta Energy Minister Marg McCuaig-Boyd criticized Morneau and his federal counterparts for not taking the idea.

Although federal provincial and federal governments are weighing for Trans Mountain, the oil fall creates a crisis and "we need solutions," Clare Clancy said to Postmedia.

"He does not seem to have it," said the minister of energy.

"It's very disappointing and I think it's a very deaf tone. I do not know what it will take to weigh the seriously here issue in Alberta and we need help.

"But, at the end of the day, if the feds are going to forget about Alberta, our government is not."

That means that the province will probably have to spend millions of dollars and buy cars and a railway locomotive to move the plan forward.

Railways have emerged as a friction area between the federal and provincial governments as they tackle the problem of Canada's inability to get its oil resources to the market.

The price difference between Price Canada and the US benchmark was $ 38.19 per barrel on Monday.

The provincial government estimates that the reduction costs the Canadian economy up to $ 80 million a day.

Without any new pipes expected until later next year – and the future of the Trans Mountain expansion and the Keystone XL project up in the air – remains one of the few options available to promote transportation capability, if locomotives and extra cars can be found.

Record amounts of raw exports already move by train, averaging 270,000 barrels a day in September.

The proposed proposed business plan for Ottawa would see partners spend $ 350 million on fixed capital costs, together with an estimated cost of operating of around $ 2.6 billion over three years, starting next July, according to one government source.

There are projects that carriers generated by revenue would be around $ 2 billion, while Ottawa would see more federal revenue to the tone of $ 1 million a day of the better differential difference.

Two new unit trains, capable of moving around 120,000 barrels a day out of Alberta, could help the situation, although it would take time to order new locomotives.

Industry groups such as the Association of Researchers and Producers Association (EPAC) are back according to the province's proposal.

The purchase of new locomotives and rail cars is not a short-term intention to the oil crisis in part, says Ottawa, because it would take at least a year to get the new trains in operation.

Elaine Thompson / Canadian Press / AP

Although it would not come online for several months, it would still improve out-of-the-mid Canada shipping oil options.

"There's a great idea and it's a serious option that should be taken into account, given the policy problems we have put in a pipe," says EPAC's president, Tristan Goodman.

For producers who are not large enough to sign long-term shipping contracts, rail companies will not bring more cars than locomotives unless they have some kind of backup of government or help.

The problem of rail cars comes to boil because the Canadian oil drop causes disorder for government funding, and the revenue of petrolium producers.

The credit rating agency, Moody & Investor Service, said this week, it is expected that the differential difference historically will lead Alberta to post a shortfall than this year's forecast.

"Without successful government policy measures, it could delay its time line to return to balance," said Adam Hardi, Moody's assistant vice president.

The government's Notley projects will reduce $ 7.8 billion this year, and will require it to return to a balanced budget by 2023-24.

Expect to hear more about the alternatives of a railway when it's main talk Wednesday to Canada Canada Club, and to the Toronto Region Trade Board the following day.

The province's oil-by-rail scheme continues to grow, though slowly, with Alberta hoping to gain momentum for its offer.

So far, however, Ottawa is willing to leave this mobile train ticket back on.

The Calgary Herald Column is Chris Varcoe.

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