Put oil 'crisis' on first ministers' agenda: Alberta, Saskatchewan premiers

Mae Love
December 5, 2018

"This intervention will provide the kind of predictability and stability to industry players to allow them to keep people on because they can see a light at the end of the tunnel and so we are hoping it will have a neutral to positive affect on jobs going forward", said Notley.

Fire-sale prices have led to concerns the oilpatch will have to find savings elsewhere in the coming weeks and months by slashing capital spending or jobs.

Shares in the companies most likely to benefit from the move to curtail crude production from larger producers starting January 1 soared Monday as the price differential for heavy oilsands bitumen-blend fell.

Bilous says the cut in oil production is a short-term solution and is about trying to reduce the backlog of oil that we now have.

Notley's production cut is temporary and will act as a bridge to Canada ramping up crude by rail exports and expanding Enbridge's Line 3 pipeline by the end of 2019 - two further reasons why investors should think that both oil prices and energy stocks will see their growth sustained, Nuttall said. The province estimates 25 producers will have to impose cuts.

Last week, she announced a plan to buy rail cars to help ship an additional 120,000 barrels of crude a day, increasing already-record levels of crude shipped by train by more than 30 percent.

The government of Alberta is taking action to ease a regional glut of oil brought on by the continued delays of much-needed oil pipeline projects.

Suncor said in a statement Monday that price differentials were already narrowing.

Alberta's oil is selling a markedly lower rates compared with the North American benchmark, due in part to oil pipeline bottlenecks.

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On Monday, Notley addressed her cabinet before a meeting where Alberta's newly announced oil production cuts were approved. Crescent Point Energy, meanwhile, has less exposure to the regional oil price issues in Canada since it doesn't produce the deeply discounted heavy oil found in Alberta.

Notley told reporters at her announcement that it doesn't matter the size of the oil company, producers big and small will be affected. Even Notley's main political rival - United Conservative Party Leader Jason Kenney - has called for a curtailment.

But he said Notley's government has played a role in creating the problem by not pushing back as the federal government cancelled the Northern Gateway pipeline to B.C. and introduced legislation that industry leaders say will make it more hard to get oil megaprojects approved. The government said the reduction will be evaluated monthly.

"What's good for the residents is that if we can get more money for our oil and for our gas, it'll be more money in the civic offers, which we've in the past have used as a dividend for property taxes or to build things like the Leisure Centre or Event Centre", Clugston added.

"They dragged their feet".

Oilfield service companies are also on the losing side of the equation, said GMP FirstEnergy in a note, because drilling budgets will likely shrink in early 2019.

The plan marks the first time the provincial government has ordered a production cut since the 1980s, and that previous move was meant to protest federal energy policies, not exclusively to boost prices.

BMO and Imperial Oil released statements saying they are concerned about cuts and that it could put a huge dent in GDP next year.

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