Notley's rail message to Ontario focuses on Alberta's oil crisis

When Premier Rachel Notley talks about shipping more oil by rail, she says she wants to buy enough locomotives and cars for two trains of bitumen each day to the West Coast.

We have moved from surreal to bizarre to the Twilight Zone, says columnist

In a speech Thursday to the Board of Trade in Toronto, Alberta Premier Rachel Notley outlined her government's plan to buy rail cars and locomotives to carry more of the province's oil to the West Coast. (CBC)

Two trains a day.

When Premier Rachel Notley talks about shipping more oil by rail, she says she wants to buy enough locomotives and cars for two trains to carry bitumen each day to the West Coast.

That doesn't sound like much.

Until you look at the logistics.

And for the first time, Notley on Thursday explained what the logistics would look like: "Each train would pull 100 to 120 cars. To do that, every day, we would require roughly 80 locomotives and upwards of 7,000 cars. This would increase the already record levels of crude being transported across Canada by rail by more than 30 per cent."

Let that sink in for a moment.

Her comments are designed to shock, to grab the attention of Canadians. This was part of her speech to the Board of Trade in Toronto on Thursday. She made similar comments — but not as detailed about the number of locomotives and cars — in Ottawa on Wednesday.

Notley's two-day trip to Ontario was part of a shock-and-awe campaign this week, telling central Canadians about the ongoing fiscal crisis facing Alberta, and poking a stick into the eye of the federal government.

'Little excuse' for Ottawa's absence

"The federal government should be at the table on this. And in my view there is very little excuse for their absence. Either way, however, we're not going to allow this situation to continue. So I'm here today to tell you that Alberta will buy the rail cars ourselves to move this oil if that's necessary. And we're not wasting any time."

She flipped the bird, verbally, at environmentalists who have been doing all they can to stop the expansion of the Trans Mountain pipeline.

"As they fight safer, cheaper, less emissions-intensive ways to move our resources, they are driving more oil to rail," said Notley, sounding perhaps more like a Conservative than a New Democrat. "In fact, we are already moving record amounts of crude by rail. It's not what they wished for, but I guess you've always got to be careful what you wish for. Them's the breaks."

Of course, Notley's comments were aimed as much at the audience back home as they were at environmentalists and the federal government. She's telling Albertans that she will do whatever it takes to get oilsands bitumen to the West Coast for shipment at world prices overseas.

That's the key: world prices.

Record low prices

Right now, Alberta suffers a "price differential." The world price might be around $50 US a barrel but because we ship much of our landlocked oil to the United States we're getting a record low $10 per barrel.

Get more oil to Asia and our energy companies get higher prices for our oil. And the Alberta government gets more money into the provincial treasury.

Sounds simple. It isn't.

The Trans Mountain pipeline — given the thumbs up by the federal government in 2016 — is still stalled. The federal government ended up buying the pipeline this year but Notley calls that a "job well started, not a job well done."

She's now in negotiations with CP Rail and CN Rail to get Alberta-financed locomotives and cars rolling. There is capacity on the tracks, we're told.

But there's a backlog of orders for locomotives and cars from the manufacturers. It will likely be a year, maybe more, to actually get the equipment.

Notley says she would purchase the trains to help out the smaller oil producers, not the larger companies who already have their own cars.

Buying trains 'revenue neutral'

Then there's the cost. Notley said in her speeches this week that buying the rail equipment would be "revenue neutral."

"Buying these new trains, in the current, constrained situation we find ourselves in, would have many benefits. It would narrow the oil price gap by around $4 a barrel, which would generate an additional $1 million a day, at least, in federal revenues."

It's a bit surreal.

But the really bizarre moment this week came from United Conservative Party Leader Jason Kenney. This self-proclaimed free-market champion is calling on the NDP government to force oil companies to reduce production by 10 per cent.

That would help drain the glut of oil in Alberta and raise the price.

It's a highly contentious idea that has split the energy industry.

But Kenney argues that government got us into this mess and only government intervention can help get us out. Notley says she'll let us know in a matter of days what she'll do.

Kenney has made it easier now for her to intervene in the market.

We already own a pipeline and are on our way to owning a little railway company. And now we might be on the cusp of temporarily nationalizing 10 per cent of the oilsands.

We have moved from surreal to bizarre to the Twilight Zone.

About the Author

Graham Thomson is an award-winning journalist who has covered Alberta politics for more than 30 years, much of it as an outspoken columnist for the Edmonton Journal. Nowadays you can find his thoughts and analysis on provincial politics Fridays at cbc.ca/edmonton, on CBC Edmonton Television News, during Radio Active on CBC Radio One (93.9FM/740AM) and on Twitter at @gthomsonink.