EDMONTON, A.B. – Ottawa is spending $1.6 billion to help struggling energy companies stay afloat, buy new equipment and diversify as Alberta grapples with bargain basement oil prices.
Natural Resources Minister Amarjeet Sohi says $1 billion is to be set aside through Export Development Canada for oil and gas companies to make capital investments and purchase new technology.
Another $500 million is to be made available through the Business Development Bank of Canada over the next two years to help smaller oil and gas companies navigate the downturn.
Sohi says a further $150 million is to be used for clean growth and infrastructure projects.
The package does not include money for more rail cars that Alberta is planning to purchase to help move a glut of oil behind the low price of Canadian oil.
Sohi says the money, largely in the form of commercial loans, is available immediately.
“We understand that when Alberta hurts, so does Canada,” Sohi said Tuesday. “Together we can build a stronger Alberta (and) a more prosperous Canada.”
The price of Alberta oil plummeted so low last month that Alberta Premier Rachel Notley said Canada was practically giving it away. While the world sells its oil at about $50 a barrel, Alberta’s oil at one point fetched only $11 a barrel.
Notley plans to buy as many as 80 locomotives and 7,000 rail tankers, expected to cost hundreds of millions of dollars, and has announced an oil production cut to begin next year. That has helped push the price back up.
She has said Canada’s economy is still losing as much as $80 million a day because of the discount.
“We understand that for the long-term success and growth of the oil sector, nothing is more important than building the pipeline capacity to expand our non-U.S. global markets,” Sohi said.
The Trans Mountain expansion project, which would triple the flow of oil to the British Columbia coast, is in limbo despite being approved two years ago. Ottawa is revisiting the potential impacts on First Nations and B.C.’s marine environment.