The country’s largest oil producers made a pitch to the Alberta government July 9 that sounds worth considering.
It was proposed at the TD Securities Calgary Energy Conference that the province reward companies that commit to increasing crude-by-rail capacity by easing up on oil curtailment levels enacted by the government in January as a way of dealing with discounted prices on Western Canadian Select bitumen-blend crude.
The way Suncor Energy Inc. CEO Mark Little explained it, the idea would permit crude oil export capacity to grow at the same time that barrels were being produced to fill that capacity.
The proposal takes on additional merit considering that the much-delayed Trans Mountain pipeline expansion is now facing a new hurdle — another legal challenge aimed at stopping the project.
It was announced Monday that the group Ecojustice has filed a motion to the Federal Court of Appeal seeking the go-ahead to launch a judicial review of the federal government’s decision to reapprove the Trans Mountain project. The motion was filed on behalf of Raincoast Conservation Foundation and the Living Oceans Society.
Raincoast said in a statement it will argue that cabinet, in reaffirming the pipeline project, failed to comply with its responsibility to protect critically endangered southern resident killer whales.
The longer the Trans Mountain project is delayed, the more important it becomes to find another way to get Alberta oil to market — and increasing shipments by rail seems like the only viable alternative.
In a Canadian Press story, Little explained the reasoning behind the oil producers’ proposal.
“The big issue that everyone’s fearful of is you lift oil (quotas) and no rail shows up, or you lift rail (capacity) and no oil shows up, so we’re trying to figure out, is there a way we can work with the government that would be a step towards getting rid of curtailment.
“If you allowed people to increase their production if they brought incremental rail, then all of a sudden every company that’s curtailed is trying to find rail contracts.”
Curtailment of oil production was originally intended to taper off gradually and end by later this year, but Premier Jason Kenney has indicated it may be continued into next year if storage levels in the province remain high.
An official with the Canadian Natural Resources Ltd. said at the conference the firm is interested in taking rail capacity.
“It would make a lot of sense to lift curtailment as you bring on rail and, for those who commit to rail, you should get some kind of increased allocation on your curtailment,” said Steve Laut, the company’s executive vice-chairman.
Laut’s right, it does make a lot of sense. Since getting Alberta oil to market is the goal, taking steps to encourage both oil companies and railways to make it happen would seem like the way to go.