Ottawa to announce $1.6B for battered energy sector

The federal government is taking a step Tuesday to help Canada's battered energy industry.

Price for Alberta crude plummeted in the fall, province has been pushing for more help

Natural Resources Minister Amarjeet Sohi, seen here in the House of Commons, and International Trade Diversification Minister Jim Carr will be at an Edmonton college campus to unveil a support package for oil and gas companies to reach new markets. (Sean Kilpatrick/The Canadian Press)

Canada's battered energy industry will get a $1.6 billion boost from Ottawa today — an attempt by the Trudeau Liberals to slow the political and economic bleeding in the oilpatch.

Natural Resources Minister Amarjeet Sohi and International Trade Diversification Minister Jim Carr will be at an Edmonton college campus to unveil a support package for oil and gas companies reeling from record-low oil prices.

A source who provided the figure to The Canadian Press says funds will be divided among several different programs. Money is being set aside for helping companies invest in clean growth, for loans and other financial supports to locate new markets outside of the United States, and for investments in training and new technology.

The  package based, in part, on similar packages offered to the softwood, steel and aluminum sectors after the United States dealt them direct blows with new import tariffs.

Canada's oil patch isn't facing that kind of pressure, but it is still the U.S. behind much of its pain.

With pipelines at capacity and some major refineries down for maintenance this fall, the price for Alberta crude plummeted in the fall, hitting a panic-inducing $11 a barrel in late November.

Alberta Premier Rachel Notley's plan to buy more rail cars to help ship additional oil, as well as her decision to force a production cut from the biggest oil producers starting in January, helped push the price back up, trading above $26 a barrel at the end of last week.

But that is still significantly less than the U.S. price and Canada's economy is losing as much as $80 million a day because of the discount.

Chill between province, feds

Canada's almost total reliance on the U.S. as an export market contributes to the problem. Almost every drop of oil that is not refined and used in Canada is exported to the United States. Without more pipelines to the coasts where oil tankers could theoretically then ship oil overseas, Canada's oil producers are at the mercy of the Americans.

The only current proposal to increase pipeline capacity to the coasts is the Trans Mountain pipeline expansion, which is in limbo following a court ruling overturning its federal approval. Ottawa is trying to get that project back on track with more consultations, but if that does happen, it will be several years before oil actually starts to flow.

The impasse has left a sharp divide between Alberta and Ottawa.

Although Tuesday's announcement comes in the Alberta capital, neither Notley nor anyone from the Alberta government is scheduled to be there for the announcement.

Premier Notley has made no secret in recent weeks of her desire to have Ottawa help the province buy new rail cars to ship two additional trains full of Alberta crude out of the province every day.

Alberta is already negotiating with an as-yet-unnamed third party to buy the rail cars, but Canada has not indicated any willingness to share the cost of the purchase yet, and rail cars are not part of Tuesday's announcement.

Earlier this month, Sohi asked the National Energy Board to do a review of existing pipeline capacity to make sure it is being used in the most efficient way and also to figure out whether there are any short-term steps that could maximize rail capacity to ship more oil.

Days later, the NEB responded to Sohi and said it will provide him with a full report in February.

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