Oil recovery faces threat from potential rail strike

in the year stymied exports.

“Any reduction in rail capacity would not be good,” Kevin Birn, a director at IHS Energy in Calgary, said by phone. “A rail strike would stretch or constrain CP, one of the major rail lines, at a time when its most needed.”

New heavy oil production from Fort Hills mine, combined with reduced pressure on the

Keystone pipeline after a November spill filled remaining export lines to capacity this year, forcing producers to ship by rail as an alternative. But the rail companies were also constrained by heavy demand for grain shipments and cold winter weather that slowed trains.

While the maintenance shutdowns of oilsands upgraders, including

’s plant near Fort McMurray, combined with rail lines moving “a little more” crude has helped alleviate the logjam, the discount could widen back out to between US$17 and US$19 a barrel once Syncrude resumes operation, Birn said. That assumes that a rail strike doesn’t happen.

CP is the second-biggest rail shipper in Canada after

The carrier shipped 3,488 carloads of petroleum products the week ended April 14, up 28 per cent from a year earlier, company data show.

“Serving a strike notice is part of the bargaining process that unions must follow if they want to be able to strike,” Canadian Pacific chief executive Keith Creel said Wednesday in a statement. “We remain committed to achieving a win-win solution and urge the two unions to work closely with us and the federal mediators to achieve a positive outcome as soon as possible in the hours leading up to the deadline.”

“The oil industry is concerned about any further impact on the availability of rail capacity given the tight pipeline situation and is monitoring these new market developments as they unfold,” Chelsie Klassen, spokeswoman for the Canadian Association of Petroleum Producers, said in an email. ticulate a vision for climate change, for Indigenous reconciliation and so on,” he said, adding that a similar vision was needed for oil and gas products.

“We have to go back to basic principles and have that conversation. We’re shooting in the dark because we don’t know what the target is,” he said.

Senator Ghislain Maltais responded that the energy industry has not done itself any favours by failing to communicate its value to the population, and this has led to opposition to pipelines in both B.C. and Quebec.

“You said the government doesn’t have a strategy — you need to have a strategy. Leave your offices and go across Canada and you’ll see you have long-term capital,” Maltais said.

“In Quebec, 50 per cent of the population supports you. I hope you don’t make the mistake as what took place with Energy East. Go out and meet Quebeckers (and other Canadians) and explain to them what you want to do,” he said.