Canadian Pacific Railway (CP-T) Alberta's government is spending $3.7-billion to connect the oil patch to the key Gulf Coast market via rail, as the province aims to lift prices amid a shortage of export pipelines.
The Alberta Premier Rachel Notley said Tuesday as she announced the province had signed three-year contracts to lease 4,400 rail cars, "We have successfully negotiated deals with the Canadian Pacific Railway and Canadian National Railway (CNR-T) to start moving oil by rail this July."
The cars will initially ship 20,000 barrels per day out of the province but as more come into service, the shipping commitment will widen to 120,000 bpd by the middle of 2020. Much of that crude will head to the United States Gulf Coast, the world's largest refining market for heavy oil, though Mr. Notley said some volumes will go to Canada's West Coast and Eastern markets as well.
The plan to lease railway cars, buy oil from producers and sell it to refineries will cost a total of $3.7-billion, but generate $5.9-billion in government revenues over three years through a combination of oil sales, higher royalties and taxes, according to the premier. |
