Legal wheels in motion to cut oil
EDMONTON Premier Rachel Notley and her cabinet have put the legal wheels in motion to begin cutting oil production, while calling on the federal government to step up.
“We don’t actually need Ottawa’s sympathy. We need Ottawa’s full attention,” Notley said prior to a cabinet meeting Monday morning.
The meeting was called to hash out legal directives to give the Alberta Energy Regulator the power to direct oil producers to cut production by 8.7 per cent starting Jan. 1.
Notley said it will be a short-term solution designed to be monitored and adjusted monthly as necessary. It ends on Dec. 31, 2019.
“We will continue to work with industry to make sure that this curtailment is done in a way that is most effective, and that is responsible, and ensures that we don’t curtail one extra drop more than we need to,” said Notley.
The market price for Alberta oil rebounded Monday, but the discount Canadian producers have to stomach compared with the price their U.S. counterparts get is still north of $30 a barrel.
The glut in reserves driving down prices needs to be addressed before producers begin taking more drastic steps such as slashing capital projects or laying off workers, Notley said.
Alberta Energy Minister Marg McCuaig-Boyd said they’ve also talked to Saskatchewan about the cuts and are working together to resolve the price quandary.
“This is a national priority, so the more we can get on board the better,” said McCuaig-Boyd. “They’re in the same boat we are. They’re seeing the differential hurting their prices. It’s about jobs there. They’re not as big a player as us, but they’re still a player.”
Saskatchewan Premier Scott Moe said in a statement that the province isn’t considering following Alberta’s example.
Saskatchewan’s industry is conventional oil, not oilsands production, Moe said. A mandated cut would have little impact on price, but would prompt job losses and a decline in economic activity, he said.
“That said, we understand the actions being taken in Alberta and will be working with our industry partners to ensure Saskatchewan is not undermining these efforts,” said Moe.
Alberta’s price cut is rare but not unprecedented — in 1980, Tory premier Peter Lougheed forced oil production cuts to protest thenprime minister Pierre Trudeau and his Liberal government’s national energy program.
Notley said a lack of pipeline capacity is a big part of the problem.
She announced last week that her government will purchase rail cars to get more oil moving while the province waits for the Enbridge Line 3 and the Trans Mountain expansion to the B.C. coast to come on line.
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. She said Ottawa must also revisit its proposed tanker ban on the northern B.C. coast and help Alberta with its rail purchase plan.
Federal Natural Resources Minister Amarjeet Sohi said Monday he is asking the National Energy Board to make sure Canada’s oil pipelines are being used as efficiently as possible. Sohi said he shares Alberta’s frustration about the oil-price crisis and has asked the NEB to report as soon as possible.
He said the status quo on Canadian oil shipping cannot continue, but defended his government’s record on pipelines and the oil industry, noting the recent $4.5-billion purchase of the Trans Mountain pipeline in a bid to get it expanded despite political controversy.
The Trans Mountain pipeline expansion, which would triple capacity to move oil to the west coast, was approved two years ago, but is now in legal limbo as Ottawa revisits the impacts on First Nations and B.C.’s marine environment.
The federal government has not yet decided whether it will contribute anything toward Alberta’s purchase of new rail cars so that two more trains a day can transport crude from Alberta to refineries in Canada and the United States.