Alberta premier announces 8.7 per cent oil production cut to increase prices

Alberta premier announces 8.7 per cent oil production cut to increase prices

Alberta Premier Rachel Notley Orders Oil Production Slashed To Fight Price Crisis

Alberta Premier Rachel Notley announced Sunday the province will require producers with more than 10,000 barrels per day of output to cut production by about 8.7 per cent until there is enough shipping space on pipelines to improve prices, expected to take three months. The curbs will begin January 2019.

"Alberta is now producing 190,000 raw crude oil and bitumen barrels per day more than can be shipped by pipelines, rail or other means". NY time, data compiled by Bloomberg show. Bloomberg reported that the benchmark for heavy oil, Western Canadian Select, jumped to $43.40 (CAD) a barrel, from $14.48.

Western Canadian Select, the main oil sands grade, may average about $20/bbl below West Texas Intermediate for most of next year, about equal to the cost of rail transport, said Wood Mackenzie's Oberstoetter, lead analyst for Canadian upstream research.

Very. This is a rare move for a market economy like Canada, but it is not the first time an Alberta government has mandated cuts. WCS now stands at around US$29 a barrel, and sells at a US$23.85 discount to the USA benchmark, a sharp improvement from a record US$50 differential earlier this fall.

"The amount of oil that is being diverted to storage is at record highs and storage is nearing capacity", the Alberta government says.

Calgary's major integrated companies - those that both produce and refine oil - including Suncor Energy Inc., Imperial Oil Ltd. and Husky Energy Inc., said in statements they remain opposed to the cuts. "Less economic production was being curtailed and differentials were narrowing as a result of market forces", the company said in a release early Monday.

"When you are just breaking even or you are actually losing money, you can do nothing other than the bare minimum".

The change in Alberta would affect his company by about 600 barrels of oil a day, said Fagerheim. The group, led by Saudi Arabia and more recently Russian Federation, is set to meet in Vienna on December 6 and 7.

DePratto expects the production cuts to reduce Canadian real GDP growth by between 0.1 per cent and 0.2 per cent in 2019.

The Pound-to-Canadian-Dollar rate was -0.60% lower 1.6807. Still, she said many pipeline delays were hard to predict amid assurances by industry and government that pipelines could be successfully built to tidewater. "They've seen ups and downs - they've never seen anything like this before", he told CTV's Power Play on November 28.

Alberta's decision will "clear the supply glut a lot faster than it would have without intervention", Forrest noted.

An improvement in Canadian oil prices would also help smaller producers like Baytex Energy and Crescent Point Energy, which need higher oil prices to support their operations.

"Pipelines only solve one component of this", Traya said.

Notley said Prime Minister Justin Trudeau's government must do its part by rolling back proposed legislation that she says will make it much harder for energy megaprojects to be approved. The monthly curtailment levels will be provided through an order that will expire at the end of 2019, and the Alberta Energy Regulator will be tasked with implementing the system.

Notley, meanwhile, has called on the federal government to step up.

The losers include integrated producers who will likely pay more for their refining feedstock and companies that had meant to grow their production in the first half of 2019, it said.

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