Moe will not cut oil production despite pleas from Alberta's opposition leader

06 December, 2018, 09:41 | Author: Eric Barnett
  • Canadian Heavy Crude Surges After Alberta Imposes Oil Cuts

Production controls will impact both bitumen and conventional oil producers, although some of the smallest companies will be exempt.

"These resources are owned by Albertans and Canadians and we're at a real unfair advantage selling at such a discount as we are and losing the amount of revenues we're losing", says Petrone. This is especially true if companies with their own USA refining capacity, like Husky Energy Inc., Imperial Oil Ltd. and Suncor Energy Inc., decide to squeeze their own workers till the pips squeak to punish the government for reducing their profit expectations for the greater good.

Canada's Federal Court of Appeal halted the contentious Trans Mountain pipeline expansion that would almost triple the flow of oil from the Alberta oil sands to the Pacific Coast - a setback that came just as the federal government bought the project to help ensure it gets built amid strong environmental and aboriginal opposition in British Columbia.

Notley announced Sunday that next year Alberta producers would see a reduction of about 325,000 barrels per day (bpd) in order to address a brutal oil price differential.

"But the broader health of the province is likely to benefit over the medium term from the decision as a result of narrowing differentials and stronger royalty revenue".

"Suncor believes the market is the most effective means to balance supply and demand and normalize differentials", it said.

However, other major producers, such as Cenovus Energy Inc. and Canadian Natural Resources Ltd., were vocal in their support.

"There's such a surplus of oil in inventory right now that with the curtailment and stuff it should use up that inventory", says Petrone.

Western Canadian Select for January traded as much as $19.75 (U.S.) a barrel below US crude futures early Monday, a $9.25 leap from Friday, before slipping back to a $23 discount. "They had an opportunity early to do something and they didn't", said Mandel.

The Canadian Dollar rose broadly Monday as oil prices recovered from 2018 lows but developments in the domestic market have just dented the growth outlook and could have negative consequences for the currency over the coming months.

"Between now and next winter the Western Canadian oil market is at the mercy of rail schedulers and their attempts to mobilize more locomotives, tank cars, and trained crews-an effort that has thus far proved insufficient to clear the market".

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

"What's good for the residents is that if we can get more money for our oil and for our gas, it'll be more money in the civic offers, which we've in the past have used as a dividend for property taxes or to build things like the Leisure Centre or Event Centre", Clugston added.

On Monday, Alberta Energy Minister Marg McCuaig-Boyd said her government had been in contact with Saskatchewan.

He lauded the province's market intervention, calling it a necessary step. Construction is underway on Enbridge Inc's Line 3 pipeline replacement from Alberta to the United States, with the project expected to be in service by the end of 2019. "We need Ottawa's full attention", Notley said prior to a cabinet meeting Monday morning. "We interpret the phrasing of the announced cut as keeping production down 50 kb/d [year-on-year] in 2019 and 200 kb/d below our prior assessment with the greatest impact on 1Q19 (down 225 kb/d quarter-on-quarter) before new rail capacity gradually comes online from April onward", Goldman Sachs wrote in a note.



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