Falling oil-by-rail shipments could hurt Alberta’s plan to clear backlog

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The push by oil companies in Western Canada to ship oil by rail has lost its momentum, which could undermine the Alberta government’s attempts to clear the backlog of crude in the province.

The amount of oil transported by rail set records throughout much of 2018, but preliminary data for 2019 shows a noticeable drop in activity. 

Weekly shipping figures from both CN Rail and CP Rail show declining loads of petroleum products. Crude by rail likely hit another record high in December at about 340,000 barrels per day, but dropped by about 25 per cent in January, according to Martin King, an independent energy analyst.

« In January, they’ve ticked down a little bit and certainly the very last week of January, going into the start of February, they’ve come down very sharply, » said King in an interview.

The weekly data from the railways includes several different oil and gas products, but provides a rough idea about crude-by-rail volumes. Official figures from the National Energy Board won’t be known for a few months.

Data suggests crude-by-rail volumes could be falling since the start the 2019 in Western Canada. (Martin King)

The Alberta government’s decision to mandate a cut in oil production is cited as the main culprit for the drop. The curtailment has boosted prices in Western Canada to within $10 US of prices in the United States. Typically, shipping oil by rail costs between $15-20 per barrel from Alberta to refineries in the U.S., so Canadian oil prices need be much lower to cover the transportation cost.

« The differentials have narrowed so much, which is what the whole curtailment was about, but they’ve narrowed too much, » said King about companies wanting to use trains to export oil.

The independent energy analyst says the differentials between oil prices in Alberta compared to U.S. benchmarks are too narrow for companies who want to ship crude by rail. 1:13

Crude-by-rail shipments are expected to fall further this month, as Imperial Oil has said it could halt all of its train shipments because they’re no longer economical.

Imperial shipped 168,000 barrels per day on rails in December but cut the amount to about 90,000 on rails in January. The company said it plans to ship « at or near » zero barrels by rail in February.

The downturn you’re seeing now could be short-lived, but we don’t know how the Venezuelan situation is going to turn out.– Martin King, energy analyst

The Alberta government chose to cut oil production in the province to reduce the backlog of crude in the province and boost prices, which were trading more than $50 US below American prices near the end of 2018. However, the backlog may be harder to clear if crude-by-rail volumes continue to decline.

« Crude by rail should be helping to alleviate this situation in the province but because of the drastic, dramatic manipulation in the market, takeaway capacity is now being idled, » chief executive Rich Kruger said during a recent conference call with investors.

Imperial has staunchly opposed the government’s curtailment policy. So too has Suncor, which also blasted the policy for having the opposite impact to what the government wanted to achieve.

« If you look at what’s happened, the differential corrected — and over-corrected — very quickly and the unintended consequence of that is … rail economics are severely damaged and a lot of the rail movements are stopping or have stopped, » said chief executive officer Steve Williams during a conference call with investors.

Hundreds of oil tank cars are waiting to be loaded at a terminal near the border of Alberta and Saskatchewan. (Dave Rae/CBC)

The Alberta government estimated storage levels decreased by about one million barrels per week since the start of 2019. Clearing that much oil in the coming months may be more difficult since « nearly 65 per cent of January’s drawdown of [oil] was supported by crude-by-rail which will not be there in February, » said AltaCorp Capital in a research note on Wednesday.

Energy data group Genscape says inventories in Alberta climbed by about seven per cent between Jan. 25 and Feb. 1.

Alberta is easing back on its curtailment plan for February and if that continues in the months ahead, analysts say prices in Alberta could begin to lower and crude-by-rail volumes pick up once again.

« Last week, we eased oil production limits ahead of schedule, and we will continue to monitor this closely and adjust as necessary, » government spokesperson Mike McKinnon said in an emailed statement.

« We expect the differential to settle at a more sustainable level, and we continue moving forward with long-term solutions like our investment in rail and our continued fight for pipelines. »

An added wrinkle to the equation is how much refineries in the U.S. Gulf Coast will pay for heavy oil following American sanctions on Venezuela. The refineries that process heavy oil mostly rely on Canada, Mexico and Venezuela for their supply. With Venezuela out of the equation and production in Mexico slowly decreasing, refineries may pay a premium for heavy oil out of Western Canada.

That situation could reverse the sagging crude-by-rail numbers.

« The downturn you’re seeing now could be short-lived, but we don’t know how the Venezuelan situation is going to turn out, » said King, the independent energy analyst.

Oil exports by rail climbed in 2018 as oil production increased and pipelines operated at full capacity.

The Alberta government announced in late November it plans to purchase as many as 7,000 tank cars to meet its goal of shipping an additional 120,000 barrels of oil a day by train. The majority of the train cars are expected to arrive in 2020, although details about whether any contracts have been signed have yet to be announced.

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Alberta’s OPEC-style cuts draw down oil backlog, analysis firm says

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Concerns with the fallout from Alberta’s OPEC-style cuts may persist, but an energy data analysis firm says the mandatory oil curtailment appears to be drawing down crude inventories.

The province this month imposed an 8.7-per-cent oil-production cut on industry, or roughly 325,000 barrels a day, in order to clear a huge backlog of crude that was punishing Alberta oil prices.

Government officials haven’t released statistical updates on the effectiveness of the strategy, but a senior oil analyst at Genscape Inc. said its research indicates the curtailment is working as intended so far.

« We are seeing it through January 19th roughly in line with what the government has stated as their goals to draw down inventories, » Mike Walls said in an interview.

« For the most part, we saw significant builds [in inventories] basically throughout 2018, and now we are starting to see draws. So I can say that they are having an impact already. »

Premier Rachel Notley has pointed to the narrowing gap between Canadian and American benchmark oil prices as evidence of the impact of the government’s strategy. (Jason Franson/Canadian Press)

On Twitter Friday, Genscape said inventories in Western Canada fell 603,000 barrels to 34 million barrels for the week ending Jan. 18, pointing to it as « further evidence that Alberta production cuts continue to impact the market. »

The privately held U.S.-based firm uses both public data and proprietary research to gather information for clients on storage hubs, pipeline flows and crude-by-rail shipments in Western Canada.

The province did not confirm Genscape’s figures. The government gets its data from a third party and the information is not publicly available.

« We’re currently reviewing how much has been drawn down from all storage levels across Alberta, » government spokesperson Mike McKinnon said in an e-mail. « More information, including the next steps, will be available soon. » 

Alberta is matching its production levels to what its estimated export capacity is while also encouraging a drawdown in storage levels. For January and February, this production limit is 3.6 million barrels a day of raw crude and bitumen, which is slightly lower than the province’s estimated export capacity.

Premier Rachel Notley has pointed to the narrowing gap between Canadian and American benchmark oil prices as evidence of the impact of the government’s strategy.

Peter Tertzakian, executive director of the ARC Energy Research Institute, said he believes the province’s policy is working. (Monty Kruger/CBC)

On Friday, the difference was under $10 US a barrel. In the fall, it spiked to over $50.

Energy economist Peter Tertzakian, executive director of the ARC Energy Research Institute, said he believes the policy is working and that the price is a good gauge. 

« The differential has rebounded, » said Tertzakian.

« I’m optimistic we’re through the worst of it and hopefully we won’t need government intervention in the future. But the extraordinary action that they took at that time was appropriate.

« We were facing catastrophic layoffs had the situation gone on for several more weeks. I believe that was averted. Now, the situation is still not healthy, but I believe the government prevented something far worse from happening. »

Alberta announced in early December that it would temporarily impose production cuts on the industry in 2019.

The decision followed calls from some oil company CEOs — and United Conservative Party Leader Jason Kenney — for the province to enact a mandatory curtailment to bolster prices, improve cash flow and stem job losses.

But opponents of the policy — including Suncor, Husky Energy and Imperial Oil — said the market was working and that taking such a step could have implications for future investment in Alberta.

Hundreds of oil tank cars are waiting to be loaded at a terminal near the border of Alberta and Saskatchewan. For January and February, Alberta’s production limit is 3.6 million barrels a day of raw crude and bitumen, which is slightly lower than the province’s estimated export capacity. (Dave Rae/CBC)

Conference Board of Canada chief economist Pedro Antunes wrote this month that intervening in industry production plans « could hurt the province’s attractiveness for future investment over the long term. » 

But he also said the near-term solution « will likely be effective in shoring up prices and heading off a decline in royalties and a larger pullback in activity in the oilfield services sector. »

Industry and government will also be mindful of any significant interruption to rail or pipeline movement, which could have major impacts on the effort to reduce the oil glut if they occurred. 

Kevin Birn, an oilsands analyst with IHS Markit, said Alberta’s curtailment policy is probably something that’s going to be judged over a longer period of time.

« Yes, differentials have narrowed and that’s a positive metric because the prices we saw prior to Christmas were unsustainable, » Birn said. « But curtailment needs to be measured over a longer period of time. »

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

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In late November, Alberta Premier Rachel Notley announced that within « a few weeks » her government would unveil its plan to buy thousands of railcars to help transport the province’s oil to market. 

Eight weeks later and the provincial government is still in negotiations with railway companies and suppliers. The latest update from Energy Minister Marg McCuaig-Boyd was only to say « it’s an ongoing conversation. »

The government says it needs the cars because there’s a backlog of oil in the province and a lack of pipeline space to export it.

With few details coming from the Notley government, here’s what we know — and don’t know — about its plan.

Total cost

The government hasn’t provided an estimated cost for buying the railcars, as negotiations are ongoing. It’s difficult to hazard a guess considering how few details are known about what the government is trying to acquire.

Notley has said Alberta needs to buy as many as 7,000 tank cars to meet its goal of shipping an additional 120,000 barrels of oil a day by train. She has also said that could include about 80 locomotives, with each train pulling 100 to 120 cars.

Workers prepare to start loading a tank car at an Altex Energy terminal. (Dave Rae/CBC)

Each tank car can hold nearly 700 barrels of oil.

The province likely won’t buy the cars, but instead lease them for between three and five years, which experts say is the industry standard.

The government also wants to sign agreements with railway companies and secure capacity to load oil in Alberta and unload the trains at destinations in North America.

Railcar shortage

Finding that many tank cars may prove difficult because of a shortage throughout North America.

In the third quarter of 2018, railcar manufacturers received orders for 11,000 new tankers, according to data from the Washington-based Railway Supply Institute (RSI). About 3,000 new cars were produced in that quarter and the backlog of orders now sits at about 31,000.

The shortage of tank cars is partly the result of Canada and the U.S. both transitioning away from the old model DOT-111 tank cars, which were involved in the deadly rail disaster in Lac-Mégantic, Que., in 2013. The new standard is the TC-117 in Canada (DOT-117 in the U.S.), which features a thicker steel hull, thermal protection, and protective valve covers, among other safety features.

Premier Rachel Notley has said she’s disappointed with Ottawa’s lukewarm response to the province’s plan to ease oil bottlenecks by buying more railcars. (Canadian Press)

Some rail companies are also retrofitting the older tank cars to meet the new safety standards in North America.

« We’re seeing fairly strong demand over the last few quarters in terms of tank car manufacturing and retrofits, » RSI president Mike O’Malley said in an interview.

Premium price

The shortage is one reason why Alberta will likely have to pay a premium to secure the thousands of tank cars it wants.

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

On a conference call with investors and analysts earlier this week, GATX executive Thomas Ellman said market lease rates for tank cars were up 25 to 50 per cent in 2018 compared to the previous year.

Another factor driving up tank car prices has been an increase in the amount of crude shipped by rail in both Canada and the U.S.

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

For eight straight months, Canada’s rail system set new records for crude volumes, according to the National Energy Board. The NEB’s most recent data is for November 2018, although recent statements from CN and CP Rail indicate crude-by-rail volumes have since dropped. 

In the U.S., volumes increased to more than 20 million barrels in October, but the numbers are still lower than in 2014, when oil prices were about $100 US per barrel and more than 35 million barrels were transported by rail, according to the U.S. Energy Information Administration.

‘Insurance’ plan

The potential impact of the Alberta government’s railcar plan is debatable. The first railcars are only expected to arrive at the end of this year, with the bulk of them arriving in 2020.

By then, Alberta should have more space to export oil by pipeline, which is cheaper and faster compared to rail. Enbridge’s Line 3 replacement project, which runs from Alberta to southern Manitoba, is expected to be complete by December 2019, just as the first of the government’s railcars are expected to roll into the province.

« If that’s the case [with Line 3], we really don’t see a need for crude-by-rail volumes to continue to grow, » said Michael Dunn, an analyst for GMP FirstEnergy.

Considering delays that pipeline projects can face, Dunn said the government likely wanted to have backup measures in place in case Enbridge wasn’t able to get the pipeline up and running on time.

« I view their purchase as basically an insurance policy. »

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Women led Alberta’s economic recovery in 2018

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Female employment in Alberta is rapidly rising, as are average earnings. Today, more Alberta women in their prime working years are participating in the labour market than ever before.

In our fast-approaching election, the economy and jobs will be central issues.

Is our economy strong, or is it weak? Is the recession ongoing, or is recovery underway? Simple questions, but the answers are complex.

Overall, the economy is indeed growing and the recession is over. But not everyone experiences recovery in the same way. 

There are deep pockets of pain for some, but areas of genuine strength for others. And there’s perhaps no greater strength in Alberta’s recovery today than recent employment gains among women.

In short, Alberta women led the recovery through 2018.

That’s worth celebrating.

Gains by gender

Every month, thousands of Albertans start a new job while thousands of others lose one. There’s a constant churn of flows in and out. But by the end of 2018, over 21,000 more Albertans had jobs than one year earlier. 

For the economy as a whole, this isn’t a large gain — and it was barely above what was necessary to keep pace with population growth.

But when you split the gains by gender, the data tells a whole other story.

As I show below, roughly 23,000 more women were employed at the end of 2018 than were employed one year earlier. This more than accounts for the province’s total employment gain.

The gains for women in their prime working years, 25 to 54, were especially strong.

During the recession, we saw the share of women aged 25 to 54 with jobs fall from just over 77 per cent to a low of 75 per cent. 

But today, nearly 80 per cent of women in that group are employed — a significant increase. One has to go back to the 1990s to find an improvement in employment rates this large or this rapid.

To be clear, the economy is not a zero-sum game. Gains to one set of workers do not imply losses to another.

During the recession, job losses for men were larger than those for women, as oil and gas, construction, and so on, are male-dominated sectors. Now, during the recovery, gains elsewhere in the economy, in other sectors, are disproportionately benefiting women.

Where are the jobs?

These are broad-based gains that reflect a genuinely strong labour market. Employment in health and social services is up significantly, with nearly 23,000 more women employed there than one year ago.

But the majority of these are private-sector jobs or self-employed women operating their own businesses.

Female employment is up by 9,000 last year in business support services. Manufacturing and transport/warehousing are each employing nearly 6,000 more women than one year ago. In professional and scientific services, the number is up 3,500.

Overall, more than 90 per cent of the gains were in the private sector.

Earnings are up too. 

In 2018, the average weekly earnings for women were nearly $38 higher than in 2017 and $52 higher than in 2016.

That means women made on average about $2,700 more in 2018 compared to 2016.

Actively looking

Given such strength, more women are joining the labour force and looking for work. Many, many more.

Roughly five in six women aged 25 to 54 either have a job or are actively looking for one. This is a larger share participating in the labour market than at any point in Alberta’s history.

This matters. A lot.

Not only because these gains for women represent roughly 40,000 more individuals now searching for jobs, gaining employment, and earning income as a result, but also because it’s an important positive development in the provincial economy as a whole — and one you may not have heard of before.

It should change the way we see the recovery.

Though weak for some, the recovery is indeed strong for many others.

It’s also important because it reveals why one common indicator of recovery — the unemployment rate — shouldn’t be taken at face value.

In December, 5.8 per cent of Alberta’s prime-aged women were unemployed — barely lower than the 6.2 per cent one year earlier. But, and however counterintuitive this may sound, that isn’t a sign of weakness, and it is consistent with the strong gains displayed above.

We only count those who are looking for work as unemployed.

If more people join the labour force and begin looking, the unemployment rate naturally goes up. But that’s a good thing. I estimate that, had the participation rate for Alberta women aged 25 to 54 remained unchanged, their unemployment rate today would have been closer to an impressive 3.5 per cent — better than before the recession.

What this means for Alberta

None of this is to say Alberta’s economic situation is rosy, or that all women are seeing an improved labour market. 

The gains are larger in Edmonton than in Calgary, for example, and are exclusively among those with more than a high school diploma. Employment is down for both men and women among those with only high school education or less.

And young workers face the largest challenges.

Last March, I highlighted their difficult situation, and it hasn’t yet improved. Today, if the recession never happened, roughly 40,000 more Albertans would have a job. Young workers ages 15 to 24 account for three quarters of this.

These challenges deserve attention, of course. If we’re to have any hope of addressing them, we must understand where they are. But Alberta’s large and complex economy is not uniformly strong or weak.

It’s neither. It’s both.

Despite real challenges, there is much going well. For Alberta women in particular, recent gains are very real and worth celebrating.


This column is an opinion. For more information about our commentary section, please read this editor’s blog and our FAQ.


Calgary: The Road Ahead is CBC Calgary’s special focus on our city as it passes through the crucible of the downturn: the challenges we face, and the possible solutions as we explore what kind of Calgary we want to create. Have an idea? Email us at calgarytheroadahead@cbc.ca

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Mother of adult with autism calls Alberta’s support system ‘broken’

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A Calgary mother says she can no longer take care of her grown son with developmental disabilities, and she’s been fighting for years to get the provincially-funded support he needs to live on his own.

Lisa Matthews describes her 24-year-old son, who has autism, as gentle, artistic and fun-loving. But at six feet three inches and 450 pounds, Nicholas Matthews also faces many challenges.

« I’m afraid I’m going to find him dead in his room, » she said.

Lisa says her son struggles with depression and an eating addiction, and he spends most of his time in his bedroom working on art projects.

There have been violent outbursts and he has even attempted suicide.

« For 4½ years, we’ve been begging and pleading to get help to get Nicholas living outside of our house. »

Nicholas Matthews’ parents say they’ve been waiting for a supportive living arrangement for him through Alberta’s PDD program for more than four years. (Submitted)

While they do have funding for help inside their home, the family has been asking the province — through its Persons with Developmental Disabilities program (PDD) — for a supportive living arrangement so Nicholas can live on his own with some help.

But, according to Lisa, they’ve been faced with a barrage of setbacks, including high turnover of PDD staff. Nicholas has had six different caseworkers in four years.

« The system is a mess. There’s too much turnover. There’s too much transition … it’s broken, » she said.

To make matters worse, Lisa and her husband, Art, say they’re now struggling with physical and mental health problems they attribute to chronic stress. Art has heart problems, which required triple bypass surgery a year ago, and Lisa struggles with depression and a health condition that is still being investigated by doctors.

« [I’m] feeling helpless and hopeless because I don’t know where we go from here » she said.

Long waits a growing concern

A decade ago, Lyndon Parakin, executive director of Autism Calgary, would hear from one or two families a year in this situation.

He now hears from as many as five families per month.

« Unfortunately it’s becoming more common, » said Parakin, adding he worries about the toll these long waits for service can take on individuals and their families.

« Sometimes matters get so bad that they’re having to go to the hospital to get some help because there’s risk of harm to themselves and others, » he said.

« It becomes wearing. Your own mental and physical health is at risk, » said Parakin.

Parakin says the province needs to create a better way of transitioning people with autism to different types of care and supports as parents age or are no longer able to cope.

Lyndon Parakin, executive director of Autism Calgary says long waits for supportive living arrangements through PDD are becoming more and more common. (Jennifer Lee/CBC)

Province responds

According to the province, 60 to 70 Albertans are currently eligible for, but not receiving services through the PDD program, which is currently under review.

« [It] would not be my experience that things take that long. If the family needs supports, we would be looking to provide supports as soon as possible, » said Roxanne Gerbrandt, executive director of the disability services branch with the department of community and social services.  

She says four years is not a typical wait for a supportive living arrangement.

« How long that takes to find a right match can depend person-to-person based on the uniqueness of their needs or even the complexity of their needs, » she said.

Other factors can also play a role in wait times, according to Gerbrandt, including specific location requests, requirements that a home be on one level, safety concerns, and finding the right supportive roommate.

« Sometimes we can offer family supports that they may or may not choose to accept, » she said.

‘I’m done. I’m so tired’

While it won’t discuss specific cases, it appears the province has a different account of how long Nicholas Matthews has been on the wait list.

In a recent email to Lisa, a government official stressed the PDD team has been working with the family for just over a year to find a supportive living arrangement and that a possible placement was identified earlier this year, but turned down.

According to Lisa, they were concerned the placement wasn’t a good fit and were unable to arrange a time to view the home.

Several hours after CBC News first requested information about their case, the province contacted Lisa about two more potential homes, but she says neither worked out and the search continues.

If a home isn’t found soon she says she may consider a drastic step — dropping her son off at a police station or PDD office.

« [We] can’t continue on the way we’ve been going. I’m done. I’m so tired, » she said.

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Students in University of Alberta’s HUB call for security boost – Edmonton

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Students are calling for security upgrades at one University of Alberta residence as a rising number of incidents leave them feeling unsafe.

HUB, which doubles as a mall and student residence, has seen a rise in occurrences requiring security or peace officer intervention for each of the past four years, according to a November report by the university’s Protective Services.

“The areas in HUB closest to LRT and main entrances … those were worse spots, and, actually, the LRT spot was the worst on campus,” said Jared Larsen, who is the president of the HUB Community Association.

Incidents by the numbers

The university recorded 661 incidents last year, compared to 419 in 2014. At the end of November, there had been 537 such episodes thus far in 2018.

Trespassing has accounted for the largest proportion of the incidents in 2018, followed by theft. The report also lists two assaults and one sexual assault.

Most of the incidents took place on weekends during the late-night to early-morning hours, the report said.

HUB experienced about three times the amount of trespassing and suspicious persons situations as any other U of A building in 2017, according to a separate June report.

Changing security needs

The vast majority of HUB’s 732 residents who completed a recent survey favoured restricted access at entrances after business operating hours, according to Larsen. It is currently the only residence on campus with open, 24-hour access.

Security updates are necessary due to growth and changes in the surrounding community in the decades since HUB was built, operations director Robert Pawliuk told Global News.

“What’s changed is our environment around us,” Pawliuk said. “We didn’t have the security concerns that we [have now.]”

The university plans to hire an external consultant to identify “holistic” solutions to security concerns, according to Pawliuk.

© 2018 Global News, a division of Corus Entertainment Inc.

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As politicians blame pipelines for Alberta’s oil woes, labour union says past governments ignored upgraders and refineries

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CALGARY—Alberta’s energy minister was on the defensive Monday, fending off accusations the NDP government ignored or downplayed warnings as early as this spring about the price-differential crisis now gripping the oil industry.

Shortly after Premier Rachel Notley announced on Sunday a temporary cut in oil production of 8.7 per cent — a bid, starting in January, to reduce the price gap and increase revenue — Alberta Party Leader Stephen Mandel accused the government of sitting idly by as the differential widened.

“I’m not sure why any government wouldn’t have a program in place that allowed the changes and the reduction and curtailment to happen earlier rather than wait for as long as they have,” Mandel told reporters.

While opposition parties took aim at the NDP and the federal government, political observers and industry watchers say the current crisis was decades in the making. They argue successive Alberta governments are to blame for ignoring advice to pace oilsands development and encourage energy companies to upgrade and refine bitumen into higher-valued petroleum products.

In recent months, the price differential between Alberta crude, known as Western Canadian Select, and West Texas Intermediate has grown due to an oversupply of oil and lack of pipeline access. The differential is costing the Canadian economy an estimated $80 million a day, according to the province.

Energy Minister Marg McCuaig-Boyd told reporters Monday she wasn’t sure when the provincial government learned about the impending differential crisis but maintained the NDP took action immediately.

“I don’t know the exact timeline,” McCuaig-Boyd said. “We’ve known that this has been an ongoing issue, this differential. Not sure of the timeline, but it’s certainly not like we sat back and did nothing.”

The mandatory curtailment would see the production of raw crude and bitumen slashed by 325,000 barrels a day in the New Year, with a 10,000 barrel per day exemption for smaller producers. The province expects the reduction to fall to an average cut of 95,000 barrels per day by the end of 2019.

Notley said she expected the move to reduce the price gap by $4 US per barrel and add about $1.1 billion to government coffers.

At a news conference Sunday, United Conservative Party Leader Jason Kenney called it a “difficult moment for Alberta” but said the premier’s announcement was needed to stem the differential. Still, the opposition leader slammed the federal government for failing to build pipelines in recent years.

“We never should have been in this position,” Kenney said.

The differential — while impacted by many factors — is being dealt with by government curtailment because there are currently 35 million extra barrels in storage in Alberta that can’t be moved out due to a lack of pipeline capacity.

The government is cutting production in the hopes this number goes down. However, most political leaders agree the province needs more pipelines as an ultimate solution.

Kenney criticized Prime Minister Justin Trudeau’s veto of the Northern Gateway pipeline in 2016. First proposed in the mid-2000s, the pipeline could have been operational in 2019, moving an estimated 500,000 barrels per day.

He also called out former U.S. President Barack Obama for his 2015 veto of the Keystone XL pipeline, first proposed in 2008.

TransCanada’s Energy East was another pipeline that never saw the light of day. It would have moved hundreds of thousands of barrels per day to Eastern Canada in the hopes it replaced foreign-bought oil, Kenney said.

And most recently, in August, the Trans Mountain pipeline expansion was quashed by a Federal Court of Appeal because the federal government had not consulted with Indigenous groups properly and not fully considered coastal tanker traffic. The increase would have allowed around 600,000 additional barrels per day to be sent from Edmonton to Burnaby on the B.C. coast.

Kenney said that Alberta produces around four million barrels per day, with three million being shipped through pipelines and by rail. Alberta refineries use about 600,000 for domestic consumption in Western Canada, he said, leaving 400,000 extra every day to fill the growing backlog.

Both Kenney and Notley are calling for more pipelines as a solution to the differential and in the hope it boosts the energy economy. Even though the premier has said she would buy around 7,000 rail cars to ship 120,000 more barrels per day beginning in late 2019, it’s not an ideal situation.

“You might want to think of that next time you’re held up at a rail crossing,” Notley said to activists who oppose pipelines.

But this predicament was decades in the making, says Gil McGowan, president of the Alberta Federation of Labour. McGowan points to the blueprint laid out by former premier Peter Lougheed: ensuring each approved oilsands project came with an upgrader attached.

“The policies pursued and promoted by the conservative governments that followed Lougheed amounted to nothing short of gross negligence,” said McGowan.

“If we had built more upgraders, if we had more refineries, we wouldn’t be in the mess that we’re in today because the supply glut could have been drawn down.”

He took aim at the talking point often raised by Kenney and other politicians that the Energy East pipeline would replace foreign-bought oil, noting the biggest refinery in Eastern Canada, owned by Irving Oil, can’t refine heavy crude from Alberta.

Further, he added, “Energy East wasn’t going to go to the Irving refinery; it was going to go to an export terminal owned by Irving right next door, and it could be shipped out of Canada.”

Duane Bratt, a professor of political science at Mount Royal University, said Alberta has been subjected to the price differential for decades, once referred to as the bitumen bubble by former premier Alison Redford.

While the NDP strongly advocated for additional upgraders and refineries when it was in opposition, that talk waned after the party took office in 2015 and realized how much those projects cost, said Bratt.

Refineries require billions of dollars in capital, he explained, and companies, particularly those with facilities in other jurisdictions, are understandably reluctant to invest in new projects.

“People often talk about upgrading and refineries, except for those experts in the sector and people once they get into government,” Bratt said.

Kieran Leavitt is an Edmonton-based reporter. Follow him on Twitter: @kieranleavitt

Trevor Howell is an urban affairs reporter with StarMetro Calgary. Follow him on Twitter: @tshowell

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Alberta’s Lubicon Lake First Nation to ink land deal Tuesday with feds, province

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Alberta’s Lubicon Lake First Nation expects to mark the end of a decades-long fight for recognition on Tuesday.

But Chief Billy-Joe Laboucan says the real work will begin after the band signs off on its land claim with the province and the federal government.

He says the $113 million included in the deal will allow the band to get to work rebuilding the community of Little Buffalo.

READ MORE: Treaty signing marks start of real work for Alberta’s Lubicon, says chief

Money in the settlement is already tagged for essentials such as decent housing, a new school and an elders care facility.

Laboucan says the 246 square kilometres included in the claim are in good shape and relatively unaffected by industrial activity.

Laboucan credits former chief Bernard Ominayak for that, saying his advocacy work let companies know the Lubicon had an interest in that land and discouraged them from working there.

READ MORE: Lubicon band settles long-standing land claim for $113M and swath of land

In the late 1800s, British officials missed the Lubicon as they negotiated Treaty 8 with other Indigenous groups. Canada agreed the Lubicon deserved title to their land in 1939, but a deal was never reached.

The issue stagnated until the 1970s when oil and gas companies began carving through local traplines. By then, the Lubicon were so poor that diseases such as tuberculosis were a problem.

In 1988, Ominayak staged a protest at the Calgary Olympics and blockaded roads into the disputed area. The dispute went global as a United Nations committee criticized Canada for its treatment of the Lubicon.

“If that hadn’t been the case, we wouldn’t be here,” said Laboucan. “A lot of credit has to go to previous chief Bernard Ominayak and council, and all the chiefs before him.”

Alberta Indigenous Relations Minister Richard Feehan says signing the deal will feel a little like history.

READ MORE: Prentice welcomes new federal negotiator for stalled Lubicon treaty talks

Feehan says everyone at the negotiating table sat down with the knowledge that the time had come to settle the dispute.

Ominayak has been invited to the ceremony, although it’s not clear if he’ll attend.

Laboucan said the band can finally focus on it’s future, not its hard-luck past.

“Up until this point, we haven’t had our own land base. It’s pretty hard to do what you need to do without a land base.”

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