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

Rachel Notley and Prime Minister Justin Trudeau meet in Edmonton on Sept. 5 2018.
Jason Franson  The Canadian Press

The oil-rich Canadian province announced a plan Sunday to force producers reduce output by 8.7%, or 325,000 barrels per day (bpd), effective January 1, 2019, until the excess crude in storage is drawn down.

"We need them to toss the half-hearted statements away", Notley told her ministers.

However, he says we should turn our eyes to the world stage.

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.

If there is a cut back, he says, gasoline prices will inch up.

The opposition leader said he agrees with Notley's action; the UCP's Jason Kenney says Alberta should have never been in this situation to begin with, criticizing Ottawa for killing pipeline projects.

Canada's largest oil and gas company, Suncor Energy Inc., opposed the curtailments as an unnecessary market intervention, noting it is insulated from most price discounting due to its Canadian refining assets and firm pipeline contracts.

When both changes have taken effect, producers will no longer need Notley's mandatory production cut and should be able to efficiently send crude to the U.S. Increased crude by rail exports alone should result in Canada being able to send out an additional 450,000 barrels per day, Nutall said.

The amount being cut is more than the total production of each of OPEC's three smallest members: Equatorial Guinea, Gabon and the Republic of Congo.

Notley said the government has a duty to protect resources as they are owned by every Albertan.

The announcement is expected to narrow the differential by at least $4 per barrel and add an estimated $1.1 billion to government revenues in 2019-2020. CEO Alex Pourbaix, another prominent voice inside the industry.

The premier announced the cut on Sunday.

About the only dissenting voice has come from Canada's integrated oil companies, whose refineries have been benefiting from the cheaper feedstock.

Alberta produces 3.7 million barrels a day, but that's 190,000 barrels more than can be shipped.

"Ottawa's failure in this area has left Alberta's energy producers with few options to move their products, resulting in serious risks for the energy industry and Alberta jobs", reads a release from the province.

However, it was Notley's assurances that a decision on curtailing output was coming soon that helped boost heavy Canadian crude prices by 49 percent last week. WCS closed at $13.46 a barrel earlier this month, the lowest on record in Bloomberg data stretching back to 2008. At present, 97 percent of Canadian oil exports go to the USA, which is awash with oil.

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