May 2, 2018 / 10:38 PM / 19 days ago

Alberta to hold talks on crude transport with producers, railways: minister

CALGARY, Alberta (Reuters) - Alberta will hold talks with rail operators and oil producers aimed at smoothing the path to get more crude moving by rail amid a transportation bottleneck in the Western Canadian province, Alberta’s energy minister said on Wednesday.

The first session on Friday will include senior executives from Canada’s top oil producers and the two main railways, Canadian Pacific Railway and Canadian National Railway, the minister, Margaret McCuaig-Boyd, told reporters at a Calgary conference.

“We’re hearing there’s constraints and there’s gaps between the rail companies and producers, so what are those gaps and how can we address them,” she said.

Railways, who added crude by rail capacity earlier this decade only to have the market vanish as pipeline space opened up, have been slow to move back in the oil transport business, asking producers to sign longer-term deals. But oil producers want flexibility to switch to pipeline, which is far cheaper, if capacity becomes available.

“A pipeline isn’t going to be built overnight. So we need to have strategies for all market access,” said McCuaig-Boyd.

Canada’s energy producers are struggling as increased oil sands output has run up against a lack of new export pipelines and tight rail capacity, sending the differential between Canadian oil prices and the U.S. crude benchmark to multi-year highs.

Adding to the crunch, Kinder Morgan Canada paused work last month on its Trans Mountain pipeline expansion, citing opposition in British Columbia, and said it would decide by May 31 on whether to go ahead with the build or not.

Both Alberta and Canada’s federal government have pledged financial support to the project, which would nearly triple capacity on an existing line from Alberta to a B.C. port.

When asked about Alberta’s financial pledge, McCuaig-Boyd said the government was open to “all options,” though she declined to clarify if the province was considering an ownership stake in just the project or the entire pipeline or company.

Reporting by Julie Gordon in Calgary; Editing by Phil Berlowitz and Grant McCool

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