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Alberta Easing Oil Production Cuts As Price Improves

EDMONTON – Alberta is easing mandatory production cuts as the price of oil increases, but industry players remain concerned about the underlying problem that drove the curtailment in the first place: a lack of adequate pipeline capacity.

“We’re not out of the woods yet, but this temporary measure is working,” Premier Rachel Notley said in a statement Wednesday.

“While it hasn’t been easy, companies big and small have stepped up to help us work through this short-term crisis while we work on longer-term solutions, like our investment in rail and our continued fight for pipelines.”

Last month, the province ordered production of raw crude oil and bitumen to be reduced by 325,000 barrels per day, or about 8.7 per cent of Alberta’s production. It was a way to manage the punishing price gap between Alberta heavy and U.S. light oils, which exceeded $50 a barrel at times last fall.

The discount has since narrowed. According to figures on the Petroleum Services Association of Canada’s website, the differential was just US$9 as of Tuesday.

Tristan Goodman, president of the Explorers and Producers Association of Canada, told a news conference Wednesday he’s glad to see a sensible approach toward easing the production cuts, but it will only go so far.

“Without fixing the market access problem, the reality is you’re going to eventually end up back in a similar situation because we’re missing that fundamental key piece that we’re going to keep hammering on, which is market access.”

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– By Lauren Krugel in Calgary.

News from © Canadian Press Enterprises Inc. 2019