WATCH LIVE: Alberta to announce if it will impose oil production cuts
Alberta’s premier plans to announce Sunday whether her government will impose industrywide oil production cuts in the Canadian province.
The government said Saturday that Premier Rachel Notley will lay out the next steps to ensure Albertans get the best possible value for their energy resources. Alberta has the world’s third-largest oil reserves and is the top source of foreign oil for the U.S.
The premier released an op-ed piece in which she says the province must act now to deal with a growing glut of oil that she blames on a lack of pipeline capacity. Notley writes that there are two competing ideas for short-term relief — either let the market sort itself out, risking possible job losses and business closures, or intervene and temporarily restrict production.
“This is a major decision with major implications,” Notley wrote about the announcement coming Sunday.
She says 35 million barrels of Alberta oil is sitting in storage. As a result, the price of Alberta crude is sitting around $10 a barrel, which Notley says is a fraction of what other world producers are getting. She says it means Alberta is losing $80 million Canadian (US$60 million) a day.
The premier has already said the province will buy 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, with the first shipments expected in late 2019.
But she says in her op-ed piece that rail cars, new pipelines and increasing domestic refining capacity won’t bring relief soon enough.
“We need to do more and do it now,” Notley writes. “Neither choice is without downsides.”
Cenovus Energy proposed the idea of a production cut last month and the idea is being supported by opposition politicians in Alberta, including United Conservative Party leader Jason Kenney. However, the Imperial and Husky companies said Friday that they oppose involuntary production cuts but support the rail investments because that could help to improve market access.
Alberta needs new pipelines to expand its export options for its growing oil sands production. At present, 97 per cent of Canadian oil exports go to the U.S., which is awash with oil.
But Canada’s Federal Court of Appeal halted the contentious Trans Mountain pipeline expansion that would nearly triple the flow of oil from the Alberta oil sands to the Pacific Coast _ a setback that came just as the federal government bought the project to help ensure it gets built. The court ordered the country’s National Energy Board to redo its review of the pipeline.
A U.S. federal judge also blocked a permit for construction of the Keystone XL oil pipeline from Canada and ordered officials to conduct a new environmental review.