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Ottawa to announce help for struggling oil patch, but no money for rail cars yet

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Ottawa, O.N. – The federal government is taking a step Tuesday to help Canada’s battered energy industry.

Natural Resources Minister Amarjeet Sohi and International Trade Diversification Minister Jim Carr will be at an Edmonton college campus to unveil a support package for oil and gas companies to reach new markets.

The announcement is in Alberta, but the funds are available to any oil and gas companies nationwide.

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Premier Notley has made no secret in recent weeks of her desire to have Ottawa help the province buy new rail cars to ship two additional trains full of Alberta crude out of the province every day.

Alberta is already negotiating with an as-yet-unnamed third party to buy the rail cars, but Canada has not indicated any willingness to share the cost of the purchase yet, and rail cars are not part of Tuesday’s announcement.

Although the price for Alberta crude has rebounded slightly from a panic-inducing $11 a barrel in late November, it is still trading between $26 and $28, only about half of what Texas oil producers are getting. The difference is costing the Canadian economy an estimated $80 million a day, according to both the Alberta and federal governments.

Alberta’s struggle to get its oil to market with pipelines at capacity and some refineries down for maintenance have contributed to the price differential, but so has Canada’s almost total reliance on the United States as an export market.

Almost every drop of oil that is not refined and used in Canada is exported to the United States. Without more pipelines to the coasts where oil tankers could theoretically then ship oil overseas, Canada’s oil producers are at the mercy of the Americans.

The only current proposal to increase pipeline capacity to the coasts is the Trans Mountain pipeline expansion, which is in limbo following a court ruling overturning its federal approval. Ottawa is trying to get that project back on track with more consultations, but if that does happen, it will be several years before oil actually starts to flow.

The impasse has left a sharp divide between Alberta and Ottawa.

Although Tuesday’s announcement comes in the Alberta capital, neither Notley nor anyone from the Alberta government is scheduled to be there for the announcement.

Earlier this month, Sohi asked the National Energy Board to do a review of existing pipeline capacity to make sure it is being used in the most efficient way and also to figure out whether there are any short-term steps that could maximize rail capacity to ship more oil.

Days later, the NEB responded to Sohi and said it will provide him with a full report in February.9

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