Government & Regulatory | Top Story | Midstream - Rail & Trucks
Alberta Government to Purchase Rail Assets as it Looks to Capitalize on Oil Exports
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Alberta Premier Rachel Notley has released a statement that the Albeta government will be purchasing existing rail assets so it can move oil in and out of the territory. The Alberta Petroleum Marketing Commission (APMC) is currently in negotiations for certain undisclosed rail assets.
This move is an attempt to bridge the price gap that Alberta is experiencing due to not developing its rail infrastructure over several years - this lack of infrastructure has stifled the export of oil from the province - which is home to the popular Duvernay, Cardium and Montney resource plays.
Alberta’s goal is to create enough new rail capacity to move 120,000 barrels a day out of the province to markets where our oil can earn the best value possible for three years, starting late 2019.
Details:
- The APMC has engaged a third party to negotiate with industry and acquire additional crude-by-rail capacity, entering into various commercial agreements for the following crude-by-rail logistical components:
- rail service from rail companies in the form of locomotives, staff and track capacity
- rail tank cars from midstream suppliers
- on-loading capacity in Alberta to load oil onto rail tank cars
- off-loading capacity to unload rail tank cars at destinations
- Based on initial negotiations, a minimum three-year contract could include the following:
- leasing new rail cars, with the first rail cars moving oil by December 2019
- securing 15,000 barrels per day (bpd) by December 2019, ramping up to 120,000 bpd by August 2020
- This action taken could have a positive impact on the light-heavy differential of up to US$4 per barrel over that three-year period
- The terms of the future agreements are expected to be settled in the next few weeks.
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