What we know about Alberta’s devise to buy thousands of oil tank cars

In late November, Alberta Premier Rachel Notley announced that within “a few weeks” her supervision would betray a devise to buy thousands of railcars to assistance ride a province’s oil to market. 

Eight weeks after and a provincial supervision is still in negotiations with railway companies and suppliers. The latest refurbish from Energy Minister Marg McCuaig-Boyd was usually to say “it’s an ongoing conversation.”

The supervision says it needs the cars given there’s a reserve of oil in a range and a miss of tube space to trade it.

With few sum entrance from a Notley government, here’s what we know — and don’t know — about its plan.

Total cost

The supervision hasn’t supposing an estimated cost for shopping a railcars, as negotiations are ongoing. It’s formidable to jeopardy a theory deliberation how few sum are famous about what a supervision is perplexing to acquire.

Notley has pronounced Alberta needs to buy as many as 7,000 tank cars to accommodate a idea of shipping an additional 120,000 barrels of oil a day by train. She has also pronounced that could embody about 80 locomotives, with any sight pulling 100 to 120 cars.

Workers ready to start loading a tank automobile during an Altex Energy terminal. (Dave Rae/CBC)

Each tank automobile can reason scarcely 700 barrels of oil.

The range approaching won’t buy a cars, though instead franchise them for between 3 and 5 years, that experts contend is a attention standard.

The supervision also wants to pointer agreements with railway companies and secure ability to bucket oil in Alberta and unpack a trains during destinations in North America.

Railcar shortage

Finding that many tank cars might infer formidable given of a necessity via North America.

In a third entertain of 2018, railcar manufacturers perceived orders for 11,000 new tankers, according to information from a Washington-based Railway Supply Institute (RSI). About 3,000 new cars were constructed in that entertain and a reserve of orders now sits during about 31,000.

The necessity of tank cars is partly the outcome of Canada and a U.S. both transitioning away from a aged indication DOT-111 tank cars, which were concerned in a lethal rail disaster in Lac-Mégantic, Que., in 2013. The new customary is a TC-117 in Canada (DOT-117 in a U.S.), that features a thicker steel hull, thermal protection, and protecting valve covers, among other reserve features.

Premier Rachel Notley has pronounced she’s unhappy with Ottawa’s lukewarm response to a province’s devise to palliate oil bottlenecks by shopping some-more railcars. (Canadian Press)

Some rail companies are also retrofitting a comparison tank cars to accommodate a new reserve standards in North America.

“We’re saying sincerely clever direct over a final few buliding in terms of tank automobile production and retrofits,” RSI president Mike O’Malley pronounced in an interview.

Premium price

The necessity is one reason because Alberta will approaching have to compensate a reward to secure a thousands of tank cars it wants.

One of North America’s largest railcar leasing companies pronounced prices are increasing.

On a discussion call with investors and analysts progressing this week, GATX executive Thomas Ellman said marketplace franchise rates for tank cars were adult 25 to 50 per cent in 2018 compared to a prior year.

Another cause pushing adult tank automobile prices has been an boost in a volume of wanton shipped by rail in both Canada and a U.S.

Canada set several annals in 2018 for shipping oil by train. (Dave Rae/CBC)

For 8 true months, Canada’s rail complement set new records for wanton volumes, according to a National Energy Board. The NEB’s many new information is for November 2018, nonetheless new statements from CN and CP Rail prove crude-by-rail volumes have given dropped. 

In a U.S., volumes increasing to some-more than 20 million barrels in October, though a numbers are still reduce than in 2014, when oil prices were about $100 US per tub and some-more than 35 million barrels were ecstatic by rail, according to the U.S. Energy Information Administration.

‘Insurance’ plan

The intensity impact of a Alberta government’s railcar devise is debatable. The first railcars are usually approaching to arrive during a finish of this year, with a bulk of them nearing in 2020.

By then, Alberta should have some-more space to trade oil by pipeline, that is cheaper and faster compared to rail. Enbridge’s Line 3 deputy project, that runs from Alberta to southern Manitoba, is approaching to be finish by December 2019, only as a initial of a government’s railcars are approaching to hurl into a province.

“If that’s a box [with Line 3], we unequivocally don’t see a need for crude-by-rail volumes to continue to grow,” said Michael Dunn, an researcher for GMP FirstEnergy.

Considering delays that tube projects can face, Dunn pronounced a supervision approaching wanted to have backup measures in place in box Enbridge wasn’t means to get a tube adult and using on time.

“I perspective their squeeze as fundamentally an word policy.”

Article source: https://www.cbc.ca/news/business/alberta-oil-crude-by-rail-1.4991466?cmp=rss