As Alberta’s oil-reliant economy suffers an unprecedented contraction as a result of coronavirus-induced oil demand declines, it appears that there may be a silver lining amid the chaos after all. On Friday, US President Donald Trump announced via Twitter that he has approved a $22 billion railway project between Alberta and Alaska.
The freight rail project, dubbed the A2A Cross-Border Rail, was initially recommended to the president for approval by Alaska Senator Dan Sullivan and Congressman Don Young. The new 2,570- kilometre rail is slated to start in Fort McMurray Alberta, span across the Northwest Territories and Yukon, before ending in the the Delta Junction in Alaska from where it will connect onto existing rail systems en route to ports near Anchorage.
Christine Myatt, who is a spokesperson for Alberta Premier Jason Kenney, met the news with approval, noting that the project will expand trade between the two countries, and ultimately expose the province’s products to international markets. University of Calgary’s School of Public Policy economist Kent Fellows notes that given the recent fluctuations in the oil market, the railway could also be used to haul other commodities – something that is otherwise unattainable with pipelines. Moreover, the line could also be used to haul imports into Canada as well.
After the formal approval of the A2A railway, the next step for Canada and the US is to obtain appropriate regulatory approvals, as well as conduct environmental impact assessments. With respect to Alberta’s portion of the railway segment, the province anticipates to commence field activities such as access road preparation, land clearing, and fencing within the next three to six months. Once the project is completed, it is anticipated that over 18,000 new jobs for Canadians will be created as a result, and increase Canada’s GDP by $60 billion by 2040.
Information for this briefing was found via A2A and the Calgary Herald. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.