Published: Thu, December 06, 2018
Business | By Eloise Houston

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

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

The price differential between Western Canadian Select and West Texas Intermediate has fluctuated in recent weeks, peaking at around C$45 a barrel.

Notley said it will be a short-term solution created to be monitored and adjusted monthly as necessary. Analysts said cuts could reduce demand by up to 70,000 bpd.

Mayor Ted Clugston has already said the efforts are "too little, too late".

While praising her main opponents in the Alberta legislature, Notley put the blame for the current state of affairs right where most Albertans seem to think it belongs: On the federal government for not approving the pipelines Albertans have now persuaded themselves will solve all their economic problems.

Cenovus Energy Inc. CEO Alex Pourbaix, who has called for government-mandated cuts, lauded the news and said "these are not ordinary circumstances".

The premier was asked about production cuts following a speech she made to the Toronto Board of Trade on Thursday, but wouldn't say whether she was for or against the idea.

"The real trade vulnerability would be if curtailment led to lower shipments to the USA because then that would be actionable" under current trade terms, Sands said in an interview.

Shippers and refiners are moving discounted barrels of oil via rail or trucks, but the storage glut sits at more than 35 million barrels in Alberta, just below all-time records set in September, according to data firm Genscape. "The time has come to take responsibility for the inaction by this government ... it's been frustrating".

The first 10,000 bpd for each company will be excluded, said the province. Those cuts added up to about 150,000 barrels a day, according to Explorers and Producers Association of Canada. The province estimates 25 producers will have to impose cuts.

Still, MacNaughton says he has reached out to his counterpart Kelly Craft to emphasize the cuts are only temporary and that Canada does not feel they violate existing free-trade rules.

He also said he believes the move will prevent job losses.

"Even before these revisions our forecasts were below consensus for Canadian GDP based in part on the dampening effects of slower global growth on the oil patch and other sectors", says Shenfeld.

But Notley certainly did this with the knowledge that prices will rise relatively soon anyway as US refineries now partly closed for maintenance come back on stream.

A release on the prime minister's website details some of the subjects on the agenda for the First Ministers Meeting, which will gather all of Canada's premiers in Montreal on Friday.

Natural Resources Minister Amarjeet Sohi said Sunday that Ottawa shared Alberta's frustration on the price discount.

"The pipes will continue to need condensate for the bitumen", said Alan Boras, director of communications at condensate producer Seven Generations Energy. The NEP remains infamous in Alberta, seen both as shorthand for government overreach and a reason to be wary of leaders named Trudeau. Notley and the industry proponents of the move have argued that it's not so much government meddling in the market, rather it's a way of fixing a broken market. It said 90 per cent of its oil production is either in the US, or is downstream of the recent apportionment points which are impacting prices, so it's average selling price hasn't been as impacted as other companies.

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