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Questions surround Notley's plan to purchase rail tankers

(Tom Ross - 660 NEWS)
Summary

Premier Notley will provide an update at 1:00 pm on Tuesday


Some energy companies are questioning the move


EDMONTON (660 NEWS) – We could learn more on Tuesday about the Alberta government’s plan to purchase rail tanker cars aimed at getting more crude to market.

Premier Rachel Notley is scheduled to release an update at 1:00 pm MDT.

In November, Notley announced her government was eyeing up to 7,000 rail cars and locomotives.

READ MORE: Alberta to purchase rail cars to ship oil

Now, some analysts are questioning the move.

Mike Walls at Genscape said crude oil production cuts announced by the Alberta government had the unintended consequence of making rail shipments of crude less economical.

“It’s possible government didn’t consider (crude oil shipments) dropping off as materially as it has in the past few weeks.”

Some producers, like Imperial Oil, are eliminating almost all rail shipments in February.

“If it’s going to be uneconomic for them, they’re going to take down rail,” said Walls.

Walls said the lack of pipeline capacity for Alberta crude won’t eliminate the need for rail in the future.

“In the near term, rail is uneconomic. Longer term, some amount of rail is going to be needed.”

READ MORE: Suncor cites crude-by-rail woes as it calls for early end to Alberta oil cuts