Alberta eyes private producers as option to move crude

CALGARY (Bloomberg) -- Shifting Alberta's shipments of crude-by-rail to private producers, is an option that Cenovus Energy Inc. CEO Alex Pourbaix said Alberta Premier-Elect Jason Kenney may be able to consider, instead of scrapping the plan altogether.

Kenney, who takes office next week, has vowed to end predecessor Rachel Notley’s $2.7 billion (C$3.7 billion) investment in expanding the province’s crude-by-rail capacity, saying the government shouldn’t risk taxpayer money on the plan. Pourbaix said he’d still like to see that capacity come online because Alberta’s oil producers need more rail service to get their supply to market until new pipelines are built.

“There’s probably an opportunity where the government could ultimately get those rail contracts in the hands of producers, and that would strike me as better than terminating them,” Pourbaix said in an interview Wednesday. Christine Myatt, a spokeswoman for Kenney, declined to comment.

Cenovus is increasing its own ability to move crude by rail, signing contracts last year for 100,000 bpd capacity. The Calgary-based company shipped 15,000 to 20,000 bopd under that program in the first quarter, with the only bottleneck being the delivery of the new rail cars, executives said on a conference call today.