Letters to Railway Companies on NDP’s Secret $4 Billion Deal

EDMONTON, AB (February 21, 2019) – United Conservative leader Jason Kenney has written to railway companies Canadian National and Canadian Pacific, outlining concerns with the NDP government’s costly and risky $4 billion crude-by-rail scheme, the full details of which have not been disclosed to Albertans.

“While we have not been able to obtain details on the contract provisions, our review suggests that contracts are well above market value, and address a need that does not exist,” Kenney states in the letters. “It is clear to us that oil producers have been prepared to increase shipments by rail at their own expense under the right market conditions.”

The letters can be viewed below.

Letter to CP
Letter to CN

The NDP’s crude-by-rail scheme was announced this past Tuesday, more than two weeks into the legal campaign period. The terms of the agreements have not been disclosed to Albertans by the NDP government.

“If the Premier wants to defend the NDP’s gamble with taxpayer dollars, she can start by releasing the contract and business case so we can see all the details,” Kenney said.

Yesterday, Kenney indicated that a United Conservative government would seek to cancel the contracts.

Reaction to the NDP crude-by-rail scheme:

Rafi Tahmazian, senior portfolio manager at Canoe Financial: “I think all of their energy should have been spent on trying to cure the illness, not trying to keep us alive with the illness. The cure is to get the pipelines. Instead what we have is governments creating more and more interference in the private sector, and costing us more and more… [Notley is] spending $3.7 billion of … Albertans’ money to try to create $2.2 billion of profit in the long term, on her ‘zero-risk’ policy. As an investor, that’s irresponsible. A regulator would probably take my license away for making a statement like that – ‘zero-risk’ – that’s ridiculous.” (BNN Bloomberg, Feb. 20, 2019)

Michael Loewen, commodities analyst with Scotiabank: “The finer details pertaining to the crude-by-rail deal are vague as exhibited by the Q&A session, which may highlight market and operational risk. The following are unknown: From which E&Ps (exploration and production) does the province purchase barrels? Is access to crude-by-rail loading facilities included in these CN and CP Rail deals? Into which markets (exactly) will these barrels be sold?” (BNN Bloomberg, Feb. 20, 2019)

Robert Cooper, Acumen Capital Partners: “There’s no reason why private sector companies couldn’t have done this on their own — and, in fact, they have been doing it on their own… What the government has basically done is bolster CN and CP’s oil-by-rail profits for the next three years.” (CBC, Feb. 20, 2019)

Kevin Birn, analyst with energy research firm IHS Markit: “This is to help ensure smaller producers are not left out of the system over the next few years…It’s not without risk. We are putting taxpayer dollars on the line here.” (CBC, Feb. 20, 2019)