Alberta oil cuts will slow Canadian economy next year, banks predict

Alicia Cross
December 7, 2018

"We regularly manage a wide range of risks associated with technical, operational and market considerations", said Imperial Oil Ltd. (IMO.TO) CEO Rich Kruger in a statement.

We need to show the market that we won't give away our oil.

Fire-sale prices have led to concerns the oilpatch will have to find savings elsewhere in the coming weeks and months by slashing capital spending or jobs. The cuts are scheduled to end on December 31, 2019.

Notley blamed the oil price gap on the federal government's failure to build pipelines resulting in the province producing 190,000 raw crude oil and bitumen barrels per day that can not be shipped out. The reduction would drop to 95,000 barrels a day by the end of next year. Each operator will have their first 10,000 barrels per day exempted, so small producers are not affected. If Saskatchewan followed the Alberta model, and all producers over 10,000 bbls/d were curtailed by 8.7 per cent, the curtailment would total 25,484 bbls/d.

There are now about 35M barrels of oil in storage, twice the normal levels.

"Curtailment is projected to reduce volatility, narrow the differential by at least $4 per barrel relative to where it otherwise would have been and add an estimated $1.1 billion of government revenue in 2019-20 - money used to pay for roads, schools and hospitals", Alberta's government says. In 1980, then-Premier Peter Lougheed forced cuts to protest a national energy program that he said would have harmed the province's oil industry.

Alberta is also planning on buying as many as 80 locomotives and 7,000 rail tankers - expected to cost hundreds of millions of dollars - to move the province's excess oil to markets and address the pipeline bottleneck.

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.

Oil prices were pressured by a weekly report from the American Petroleum Institute (API) that said US crude inventories rose by 5.4 million barrels in the week to November 30, to 448 million barrels, in a sign that USA oil markets are in a growing glut.

Producers' stocks naturally reflected the good news, and there may be more on the way if OPEC agrees to a production cut tomorrow in Vienna.

Kate Middleton talks Christmas party sugar highs
And the wide-legged style is her particular favourite, worn on multiple occasions since she took up royal duties a year ago. The Duchess of Cambridge says her and Prince William's newborn son has started waving four months before he turns one.

China Trade War Comes to a Temporary Halt
Under the agreement, Trump is shelving a plan to raise existing tariffs of 10 percent to 25 percent from the start of next year. Chinese regulators in July blocked Qualcomm's $44 billion takeover bid for its Netherlands-based rival, NXP Semiconductors NV.

Seven-year-old boy tops list of YouTube's highest earners
Ryan's earnings , which do not include tax or fees charged by agents or lawyers, have doubled compared with the previous year. The account began when Ryan , a fan of toy-review videos , asked his parents why he couldn't also review toys on YouTube .

While Notley did not refer to Saskatchewan in her remarks on Sunday, opposition leader Jason Kenney did.

The move has been supported by both the United Conservative Party and the Alberta Liberals, while industry seems to be split.

MacNaughton says he also noted for Craft that getting the Keystone XL pipeline finally approved through the US would also help with Alberta's problems.

Instead, the mandatory reductions were handed down by the provincial government of Alberta.

Official US government oil production and inventory data is due later on Wednesday.

When pressed for the timeline of that study, he said the NEB will report back to him "as soon as possible".

"They dragged their feet".

Oilfield service companies are also on the losing side of the equation, said GMP FirstEnergy in a note, because drilling budgets will likely shrink in early 2019. "As I speak, many companies face a cash-flow crisis that threatens thousands of jobs".

Industry feelings prior to the announcement had been mixed.

Other reports by Free-Prsite

Discuss This Article

FOLLOW OUR NEWSPAPER