Calgary

New UCP government 'looking at all options' on crude-by-rail contracts it pledged to cancel

Alberta's new energy minister says the recently elected UCP government doesn't want to be in the business of moving crude by rail. But she's still reviewing $3.7 billion worth of contracts signed by the previous NDP government, which analysts have suggested might not be so easy to break.

'There are some complicated decisions that will have to be made,' Energy Minister Sonya Savage says

Energy Minister Sonya Savage looks on as Alberta Premier Jason Kenney speaks to reporters in this file photo from May 1. (Jason Franson/Canadian Press )

Alberta's new energy minister says the recently elected UCP government doesn't want to be in the business of moving crude by rail. But she's still reviewing $3.7 billion worth of contracts signed by the previous, NDP government, which analysts have suggested might not be so easy to break.

Sonya Savage says the new government is going through the commitments, which are complicated, and looking at all options.

The NDP government announced plans in February to lease up to 4,400 rail cars capable of carrying Alberta crude and it also signed agreements with Canadian National and Canadian Pacific to transport those cars to American and international markets.

During the election campaign, the UCP had pledged to reverse the arrangement.

In an interview Thursday, Savage said she's still examining the details of the agreements and has yet to decide on a course of action.

"I've been going through every detail of every contract and every decision made in that regard to try to understand what the options are, moving forward," she said.

"They're obviously pretty in-depth and there's a lot of detail and there are some complicated decisions that will have to be made, and we'll have to take our time to get it right."

Asked if the government would still cancel the arrangement if it meant paying for unused capacity, Savage wouldn't say one way or another.

"We're looking at all options," she said.

'Competing with the private sector'

She added that the new government is committed, in principle at least, to take a different tack than the old one on this file.

"Alberta is not going to be in the business of competing with the private sector to be moving oil by rail," she said.

CN Railway president Jean-Jacques Ruest told reporters in Calgary on Wednesday that the company has already started working to fulfil its end of the deal with the province, which was signed with the NDP government in February and is due to take effect in July.

But he also said CN is open to working with the UCP government and trying to come to a mutually agreeable solution.

In an email Thursday, CN spokesperson Jonathan Abecassis reiterated that.

"CN strongly supports the premier's desire to get Alberta oil to market," he said, "and we want to be part of that solution going forward."

Clarifications

  • The provincial government's contracts with the railways are for the service to transport the rail cars it is leasing, not to lease the physical cars, themselves. An earlier version of this story contained unclear wording.
    May 10, 2019 5:22 PM MT

With files from Tony Seksus and Colleen Underwood

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