In its report, AltaCorp said winners from the curtailments will include the provincial government (which estimates it will earn $1.1 billion more from royalties in the 2019-20 fiscal year); energy producers in B.C. and Saskatchewan, that will benefit from better prices without having to cut production; condensate producers, as that light oil isn't included in the curtailment; and junior energy producers who are exempt from the program.
Western Canadian Select, the heavy oil benchmark in Canada, soared almost 37 per cent on the news, up to around US$30 per barrel, according to Bloomberg data, with the blend trading in the low $20 range below the USA crude, compared WITH $32 before the announcement.
The result has been oil prices for Western Canadian Select so low the province's energy resources are "being sold for pennies on the dollar", she said.
Notley said that she expects the cuts to remain in place until the 35 million barrels of oil now sitting in storage because of what she describes as "unsustainable" transportation bottlenecks are shipped to market.
Suncor said in its release on Monday that it is assessing the government's decision and will map out details of the impact when it releases 2019 capital and production forecasts.
Notley said it will be a short-term solution created to be monitored and adjusted monthly as necessary. "Saskatchewan produces a significant share of Canadian oil".
Notley said the 8.7 per cent reduction begins in January, with the expectation that figure will gradually decrease until the cuts are scheduled to end on December 31, 2019.
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The ministers called on Russian Federation "to return urgently to full and verifiable compliance ". Under the terms of the INF treaty, the USA would have to give six months' notice of withdrawal.
The current glut is due in part to pipeline bottlenecks.
"I would like to see them quit talking so much and come up with some action on this", said Alberta Energy Minister Margaret McCuaig-Boyd on Monday's episode of CTV Power Play. We may see that they're successful in decreasing the differential more significantly as we adjust to what the impact actually is.
"Between now and next winter the Western Canadian oil market is at the mercy of rail schedulers and their attempts to mobilize more locomotives, tank cars, and trained crews-an effort that has thus far proved insufficient to clear the market". The reduction would drop to 95,000 barrels a day by the end of next year. The cut seems to be working, however, and that should be welcome news right now: yesterday Reuters reported weather-related power disruptions had occurred on two major Canada-U.S. pipelines, Keystone and the Mainland system.
Alberta and oil producers prefer to add more pipelines, but projects face fierce opposition from environmentalists and some Aboriginal groups.
However, he says we should turn our eyes to the world stage.
Executives from Canada's Suncor Energy Inc, Husky Energy Inc and Imperial Oil Ltd, integrated producers with domestic refinery and upgrading capacity, expressed disappointment, however, saying they prefer market solutions to the problem.
The production curbs announced by Alberta targets producers that pump out more than 10,000 bpd, or just 25 of the roughly 300 oil companies now operating in the province. "We will review the amount every month and adjust as needed".