![\"\"](\"http:\/\/wpmedia.business.financialpost.com\/2018\/04\/chart6.jpg?w=640&h=360\")
<\/p>\nA potential strike by Canadian Pacific Railway Ltd. workers threatens to derail a recovery in Alberta\u2019s beaten-down heavy oil prices.<\/p>\n
On Tuesday, the Teamsters Canada Rail Conference and the International Brotherhood of Electrical Workers each gave Canadian Pacific a 72-hour strike notice informing the company of their plans to strike at 12:01 a.m. eastern time on April 21.<\/p>\n
A strike would come at a critical time for Western Canadian oil producers. The heavy crude they pump is selling for US$16.60 a barrel below the U.S. benchmark, from a discount of more than US$30 in February. Oil flows out of Alberta to the U.S. have improved after pipeline and rail bottlenecks earlier in the year stymied exports.<\/p>\n
<\/p>\n
\u201cAny reduction in rail capacity would not be good,\u201d Kevin Birn, a director at IHS Energy in Calgary, said by phone. \u201cA rail strike would stretch or constrain CP, one of the major rail lines, at a time when its most needed.\u201d<\/p>\n
New heavy oil production from Suncor Energy Inc.\u2019s Fort Hills mine, combined with reduced pressure on the TransCanada Corp.\u2019s 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.<\/p>\n
While the maintenance shutdowns of oilsands upgraders, including Syncrude Canada Ltd.\u2019s plant near Fort McMurray, combined with rail lines moving \u201ca little more\u201d 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\u2019t happen.<\/p>\n
CP is the second-biggest rail shipper in Canada after Canadian National Railway Inc. 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.<\/p>\n