Alberta works to buy crude rail cars amid record low oil prices

CALGARY (Bloomberg) -- Alberta is working to buy rail cars to help ship more crude as pipeline bottlenecks have the oil-rich province grappling with historic low prices for its energy products.

Premier Rachel Notley said in a speech in Ottawa on Wednesday that the province has engaged a third party to negotiate the purchases and that a deal may be struck “within weeks.” The province’s costs will be fully recouped through royalties and the selling of shipping capacity, she said.

“Don’t mistake me -- this is not the long-term answer,” Notley said. “It absolutely is not. New pipelines are the long-term answer.”

The announcement comes about a month after Alberta asked the federal government to buy more locomotives. The federal government was said not to favor that plan, and Notley has said in recent weeks that her administration may buy the equipment on its own.

Western Canada Select, a grade of crude produced by Alberta’s prolific oil sands, closed at $13.46/bbl earlier this month, the lowest on record in Bloomberg data stretching back to 2008.

Notley said buying two new unit trains could help transport an additional 120,000 bpd and help narrow the oil price gap relative to the U.S. benchmark by around $4/bbl.