Alberta to Cut Oil Production, Crude Prices Rise

Alberta premier announces 8.7 per cent oil production cut to increase prices

The move also found support among her political rivals.

The action is aimed at lifting Alberta crude prices, which plummeted earlier this fall after production growth and pipeline bottlenecks contributed to a costly oil glut.

The Railroad Commission of Texas did something similar in the 1930s, before OPEC was created, because large oil producers at the time were anxious that independent drillers were over-supplying the market.

Notley is meeting with her cabinet to issue the necessary orders to direct oil producers to begin backing off on oil production by 8.7 per cent starting January 1. The crisis has caused some producers to reduce production on their own, slash dividends and delay next year's drilling plans.

"At Cenovus, we advocated for this mandatory production cut because we continue to believe it is the only short-term solution to the extraordinary situation Alberta finds itself in", he said in a release.

Official U.S. government oil production and inventory data is due later on Wednesday. That additional rail would add 120,000 bpd in takeaway capacity but wouldn't be available for another year, and would take time to scale up. "For the long haul, pipelines remain the preferred and environmentally safer mode of exporting our energy resources out to Asian and USA markets". "We need Ottawa's full attention", Notley said prior to a cabinet meeting Monday morning. The province estimates 25 producers will have to impose cuts.

Not all companies are affected by the cuts. Each operator will have their first 10,000 barrels per day exempted, so small producers are not affected. Each company's level of curtailment will be based on six months of its highest level of production over the past 12 months, according to the statement.

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The province is directing the Alberta Energy Regulator (AER) to launch the system of curtailment through existing legislation.

Cenovus Energy proposed a reduction last month and the idea has been supported by opposition politicians in Alberta, including United Conservative Party leader Jason Kenney.

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

Moe said that while he agrees there is an unacceptably high differential for Alberta oil, "a government-mandated production cut in Saskatchewan could result in a loss of jobs and economic activity in our province, but would have little impact on the price of oil because it would disproportionately impact conventional oil production, which is not the problem".

More broadly, the slide in US oil followed a tumble in global stock markets on Tuesday, with investors anxious about the threat of a widespread economic slowdown. The system would require a total of about 80 locomotives and more than 7,000 cars.

"The folks who are tuned to refine Canadian oil are going to absorb that price and, given the state of prices globally, it will still be profitable for everybody I would think", Sands said. It not only grew for Western Canadian Select heavy oil, which always sold for less than WTI, it also appeared and then grew for our synthetic light crude which has often sold for much more than WTI. In October, WCS' discount to futures dropped to $50 a barrel.

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