Canadian province of Alberta leases 4,400 rail cars to clear oil glut

Canadian province of Alberta leases 4,400 rail cars to clear oil glut

The rail investment is meant to be a medium-term measure as new pipelines to coastal ports, such as the Trans Mountain expansion to the West Coast, remain in limbo. Initial daily shipments of 20,000 barrels are expected to begin as early as July. Aside from the tank vehicle breakdown-3,400 DOT117Js (new) and 1,000 DOT117Rs (retrofits, which would be existing equipment)-it is unknown who the equipment lessor is, and if the DOT117Js will be in addition to those already under construction or will be drawn from the existing fleet.

She said Tuesday she's not happy there has been no firm response, especially since an uplift in Alberta crude prices would boost Ottawa's revenues, too.

"If it's going to be uneconomic for them, they're going to take down rail", said Walls.

The move is also forecasted to reduce the projected differential between Western Texas Intermediate (WTI) and Western Canada Select (WCS) - the benchmark value for crude oil coming out of the USA and Canada, respectively - by US$4 per barrel between early 2020 and late 2021, states the release.

The Canadian province, which holds the world's third-largest crude reserves, plans to net C$2.2 billion ($1.7 billion) after investing C$3.7 billion to lease tank cars and buy service from rail providers, generating C$5.9 billion from sales and increased royalty and tax revenue, according to a statement on Tuesday.

The Alberta government said in November, when Canadian oil fetched near record-large discounts to USA oil, that it was seeking train capacity.

Elaborating on an announcement made at the end of last November, the provincial government issued a release on February 19 detailing the deal as well as the boons expected from the increase in oil cars.

Premier Rachel Notley speaks on Friday, Jan. 25, 2019.

The deal reached with Canadian Pacific Railway Ltd. and Canadian National Railway Co. entails leasing 4,400 rail cars over three years, buying crude from the province's producers, and then shipping the oil to various markets throughout North America.

Keeping a pledge she made in November, Alberta Premier Rachel Notley has announced the province has signed contracts to lease 4,400 rail cars to carry oilsands crude to American and global markets.

The NDP government announced the multibillion-dollar, three-year investment despite the possibility an election could be called any day. "That said, we have also stated that we will review all contracts signed by the government in the current campaign period to ensure taxpayer value", Panda said in an email.

"I don't think that's healthy in a commercial space".

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