Oil production cut to be changed as needed: Energy Minister
Jeff Hitchcock, Flickr Creative Commons
Alberta’s energy minister says the province will do what it can to try to prevent any damage to oil and gas companies from the upcoming cut in production. Dunvegan Central – Peace Notley MLA Marg McCuaig-Boyd says the decision to curtail production by 325,000 barrels a day in January was made in consultation with industry, which will continue.
“We’ve set it up so if we’ve missed something or whatever we’re going to try to work through those, try to come to a solution. Every company is different.”
A 10,000 barrel a day exemption will also be in place for producers. Only 25 of the 378 active operators in the province produce more than that and will be affected.
Companies like Cenovus, Nexen, and MEG Energy have come out in favour of curtailing, while others like Suncor and Husky have been vocal against it. McCuaig-Boyd argues something had to be done to address a storage glut and gap in oil prices.
“At the end of the day, having this wide gap that we’ve seen and the lack of pipelines is hurting us and it’s clear that if we had done nothing it would result in further job losses. We’re doing our best to bring this back so we can keep more money here in Alberta.”
While the initial cut in production works out to be around 8.7 per cent, it will be reevaluated monthly after three months. McCuaig-Boyd expects the backlog to clear up by mid to late-2019.
“Once we see that supply coming down we’ll be able to back off and let things continue. This is a short-term solution; mid-term is getting some more rail cars and long-term upgrading our resources here in Alberta and also getting the [Trans Mountain] pipeline built.”
The price difference between Western Canadian Select oil and West Texas Intermediate has been between $30 to $50 U.S. recently. At the end of the day Tuesday, WCS was sitting at $27.95 and WTI at $52.67.