Oil cuts appear to be working, Notley says
EDMONTON Premier Rachel Notley says her recent decision to cut oil production seems to be working.
And in a speech to northern Alberta leaders Thursday she also served up a little yuletide jab at the prime minister.
“It wasn’t an easy decision,” Notley said of the oil cut. “But I believe that in the circumstances it was the right decision.
“At least so far we’ve seen the right result, but you never want to shut down production as an economic plan. It’s counterintuitive. It’s not a long-term solution.”
Earlier this month, Notley ordered companies to cut output by almost nine per cent starting in the new year to close the price gap between Alberta oil and the North American benchmark.
That price gap was growing so wide that vast reserves of oil were building up in Alberta and the price was falling through the floor, leading to fears of massive job cuts and project closures.
The differential, which was over US$50 at one point, has bounced back in recent days and now trades at about US$25 less than the benchmark West Texas Intermediate price.
The oil cut program will exempt the first 10,000 barrels per day, to shield small producers. It will be reviewed monthly and is to end on Dec. 31, 2019.
Notley is buying rail cars and continues to push Prime Minister Justin Trudeau for action to end the pipeline bottleneck, considered the primary culprit for the oil glut and low prices.
Alberta’s long-term focus remains on the Trans Mountain pipeline expansion, to get more oil to the B.C. coast. The project was OK’d by the feds two years ago but is now in limbo as it was ordered to examine the impact on marine life and further consult with affected First Nations.
Notley has called on Trudeau to also roll back on two bills now before Parliament — a northern B.C. coast tanker ban and changes to rules for energy megaprojects — which critics say will hamper energy development.