Prov­ince hands out no­tices to com­pa­nies forced to cut oil pro­duc­tion


The prov­ince is in the process of no­ti­fy­ing the 25 com­pa­nies that will have to make pro­duc­tion cuts to re­duce the oil dif­fer­en­tial, says Al­berta’s en­ergy min­is­ter.

“Right now we’re work­ing with each in­di­vid­ual com­pany,” said En­ergy Min­is­ter Marg Mc­cuaig-boyd on Wed­nes­day. “There wasn’t agree­ment be­fore but I think com­pa­nies re­al­ize these are ex­tra­or­di­nary times.”

Premier Rachel Not­ley an­nounced Sun­day that Al­berta would slash oil pro­duc­tion tem­po­rar­ily by 8.7 per cent start­ing in Jan­uary, amount­ing to about 325,000 bar­rels per day (bpd).

The move aims to ship out 35 mil­lion bar­rels of oil cur­rently sit­ting in stor­age and re­duce the oil glut.

The price dif­fer­en­tial be­tween Western Cana­dian Select (WCS) and West Texas In­ter­me­di­ate has fluc­tu­ated in re­cent weeks, peak­ing at around C$45 a bar­rel. After the week­end an­nounce­ment, the value of WCS heavy crude shot up, to the re­lief of in­vestors.

Cuts will be de­ter­mined on an op­er­a­tor ba­sis, not by well or project. The base­line will be cal­cu­lated by av­er­ag­ing the six months of high­est pro­duc­tion level over the past year for each com­pany.

The first 10,000 bpd for each com­pany will be ex­cluded in an ef­fort to pro­tect small pro­duc­ers, said the prov­ince.

‘Con­fi­dent’ cur­tail­ment is trade com­pli­ant

“This wasn’t an easy de­ci­sion,” Mc­cuaig-boyd told re­porters Wed­nes­day.

“We’re main­tain­ing the vol­umes in our pipe­lines but what we’re work­ing on is the over­sup­ply here in Al­berta.”

The prov­ince said oil pro­duc­tion cuts will add an es­ti­mated $1.1 bil­lion to Al­berta gov­ern­ment rev­enue in 2019-20.

The plan, which would end on Dec. 31, 2019, is ex­pected to re­duce the dif­fer­en­tial by at least US$4 per bar­rel rel­a­tive to where it would have been other­wise.


Al­berta En­ergy Min­is­ter Marg Mc­cuaig-boyd speaks dur­ing a me­dia avail­abil­ity at the leg­is­la­ture in Ed­mon­ton on Fri­day, Nov. 9, 2018.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.