Alberta to announce if it will impose oil production cuts

Oil company in Sask. happy with no production cuts

Oil company in Sask. happy with no production cuts Lisa Schick

Notley says in the letter that there are two competing ideas for short-term relief - either let the market sort itself out, risking possible job losses and business closures, or intervene and temporarily restrict oil production. "We're not talking about trying to disrupt other products", Notley told reporters after giving a speech before the Toronto Regional Board of Trade on Thursday.

She wouldn't comment on whether she was for or against the idea, only to say that her government has been in talks with industry leaders for the past few weeks and will make an announcement soon.

"While a consensus appears to be forming among some political leaders, no such consensus exists within industry".

Under pressure from falling WCS prices that are now around $15 per barrel and zero spare takeaway capacity to ship oil to its largest purchaser, the United States, Alberta revised downward its economic growth forecasts for 2019 from 2.5 percent to 2.0 percent.

Canada is expected to average 4.59 million bpd of crude oil production this year, despite its takeaway capacity constraints. "But until pipelines are built, we need to move more oil by rail", she said, according to the newspaper. Notley offered more details of the plan on Thursday, saying that it entails running two additional trains a day, each pulling 100 to 120 cars.

During a press conference, Notley said the crude-by-rail capacity expansion is a stop-gap solution to Alberta's depressed oil prices, the Global News reported.

Notley said the oil price differential is costing the Canadian economy $80 million a day, up from $40 million a day during the same time a year ago.

Alberta needs to buy as many as 7,000 rail cars if it wants to meet its goal of shipping an additional 120,000 barrels of oil a day, says Premier Rachel Notley. "Neither choice is without downsides".

While companies including Cenovus Energy Inc. and Canadian Natural Resources Ltd. have said government-mandated production cuts would help the industry, integrated producers whose refineries are benefiting from the cheaper feedstock have opposed it.

Latest News