Canadian supply gluts and price slumps, attributed by many to obstructed oil pipeline projects, prompted appeals for help Wednesday to the country’s railways and the federal government.
Alberta Premier Rachel Notley announced that the province would form a fleet of tank cars and locomotives capable of hauling 120,000 b/d of oil by 2020.
The Canadian Association of Petroleum Producers (CAPP) issued a call for the liberal government in Ottawa to accept primary responsibility for healing the aboriginal affairs that have contributed to long delays of pipeline projects.
Notley took action after Prime Minister Justin Trudeau and federal Finance Minister Bill Morneau, during visits to the industry capital of Calgary over the previous six days, withheld commitments to support additions to railway capacity.
“There’s no excuse for Ottawa to not be at the table with us, but we cannot allow delays to continue,” Notley said. “Alberta will buy railcars ourselves in our fight to get top dollar for the resources that belong to every Albertan.”
Cost forecasts remain confidential while the Alberta Petroleum Marketing Commission, which manages the provincial royalty share of production, and a private agency conduct negotiations with railways on increasing oil train service.
Provincial authorities calculate revenue losses are piling up at a rate of C$80 million ($64 million) per day from a backlog of thermal oilsands production, which is Canada’s biggest and fastest growing natural gas user.
The surplus of productive capacity over pipeline space, currently estimated at 250,000 b/d, drives cut-throat competition for delivery service that has deepened price discounts to as low as C$40-50/bbl ($32-40) off international oil benchmarks.
Trudeau acknowledged the losses and called the current state of the industry a “crisis.” But neither the prime minister nor Morneau made any promises of immediate help amid street demonstrations outside the meeting halls where they addressed Calgary employers.
Alberta forecasts that 120,000 b/d of new rail shipments would shrink the price discounts by as much as C$4.00/bbl ($3.20). “We will not stand by while we’re forced to give our resources away for pennies on the dollar,” Notley said.
CAPP added an appeal for help with native affairs that stand out as a key ingredient of popular opposition, regulatory delays and legal setbacks that have stalled export pipeline expansion.
The trade association said members accept responsibility for “economic reconciliation” with aboriginal communities. CAPP recited corporate performance on native employment and industry supply procurement measured in thousands of jobs and billions of dollars.
“As Canada’s energy sector has grown, so has the number of Indigenous companies providing services, from road maintenance to site services and beyond,” CAPP said in a report it released on Wednesday.
“Between 2015 and 2016, oil sands operators spent about $3.3 billion on procurement alone, and worked with 399 Indigenous companies in 65 Alberta communities,” according to the report.
“In 2016 about 6% — approximately 11,900 individuals — of the Canadian oil and natural gas industry’s workforce identified as Indigenous, more than two percentage points above the Canadian workforce average.”
But economic benefits, which also include native part-ownership of projects, are no substitutes for resolutions of territorial claims, constitutional rights issues and regulatory role demands that only the federal government can settle, CAPP said.
“Companies working with Indigenous communities have found a significant impediment involves reconciliation issues that are broader than any specific project or proponent. Addressing these broad concerns to achieve the full extent of long-term reconciliation rests with the Government of Canada.”
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