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Bloomberg
Alberta’s government maintained its mandated oil curtailment in February at the same level as January even as Canadian heavy oil prices surged.
The province’s oil producers collectively must cut February output by 325,000 barrels a day, according to an email from Mike McKinnon, an energy ministry spokesman. The baseline for the cuts is the highest single month of production during a one-year period starting November 1, 2017.
The discount for Western Canadian Select at Hardisty, Alberta, to West Texas Intermediate futures shrank from $29 a barrel at the end of November to $7.85, the narrowest in more than three years, data compiled by Bloomberg show. The gap is so small that it doesn’t cover the cost of transporting crude by rail to the US Gulf Coast or, in some cases, by pipeline, a much cheaper mode of transport.
“We have seen the market respond quite definitively†to the curtailments, Alberta Premier Rachel Notley told reporters at an event near Edmonton. “We are planning for a lot of volatility†in oil prices.
Notley on December 2 announced the cuts in an effort to alleviate a glut caused by too much production encountering too little space on pipelines.
The move was designed to reduce local stockpiles and will be phased out throughout this year to 95,000 barrels a day by December 31, Notley said.