(Canadian Press)

(Canadian Press)

Alberta cuts oil production to help deal with low prices

Alberta Premier Rachel Notley says as of January there will be an 8.7 per cent reduction ordered in oil production

Alberta Premier Rachel Notley is ordering a mandatory cut in oil production to deal with a price crisis that she says is costing Canada an estimated $80 million a day.

Notley says as of January there will be an 8.7 per cent reduction ordered in oil production.

Output of raw crude oil and bitumen will be reduced by 325,000 barrels per day. That figure is expected to shrink as a glut of oil in storage is reduced.

The mandated cut ends on Dec. 31, 2019 and will be spread among all producers in an effort to stave off massive job losses.

READ MORE: Alberta buying its own rail cars to move oil

Notley says the action is necessary to reverse the widening price differential that she said could cause further harm to Alberta’s economy if not addressed immediately.

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

“In the last few weeks, this price gap has reached historic highs because we are producing considerably more product than there is transport capacity,” Notley said in a speech timed to run live on supper-hour newscasts in Alberta.

“This is creating a huge backlog and forcing the price of our oil to ridiculously low levels…. We are essentially giving our oil away for free.”

Roughly speaking, Notley said, while the rest of the world sells its oil at about $50 per barrel, Alberta fetches only $10.

READ MORE: Oil and gas commission investigating earthquakes in northeast B.C.

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.

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.

But she has said that rail cars, along with eventually increasing domestic refining capacity and building new pipelines, won’t bring relief soon enough.

“We must act immediately,” Notley said Sunday.

The Opposition United Conservatives and the centrist Alberta Party had already called for the production cut. Notley thanked them both in her speech.

Industry feelings prior to the announcement had been mixed.

Cenovus Energy proposed the idea of a production cut last month. However, Imperial and Husky said Friday they remain opposed to involuntary production cuts.

The move is not unprecedented — in 1980, Tory premier Peter Lougheed forced oil production cuts to protest the federal Liberals’ national energy program.

The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Ken Dockendorf is rallying opposition to the changes to high school sports governance. (The News files)
Maple Ridge coaches oppose changes to high school sports governance

Vote coming on May 1 could change varsity sports across B.C.

Students in Garibaldi secondary’s music program rehearse for Swing into Spring. (Special to The News)
Maple Ridge high school adding a spring to their step

Swing into Spring concert to raise money for the Garibaldi secondary’s music program

In a 2019 photograph, Yin Yin Din held a picture of her brother Kyaw Naing Din, 54, and her late father Hla Din who passed away in 2014, during a trip to Victoria. (The News files)
Family of Maple Ridge man killed by cop appeals to Attorney General for help

The Din family want B.C. Attorney General David Eby to forward their case to Crown

Maple Ridge's Doug Ubell caught some photographs recently that he was anxious to share, one taken while on the Trans-Canada Trail looking southwest towards the Pitt River Bridge, and another from on Golden Ears Bridge. (Special to The News)
Traffic on Golden Ears Bridge returning to pre-pandemic levels

Commuters from Langley, Pitt Meadows, and Maple Ridge still driving more, taking transit less

A sign to students outside Pitt Meadows secondary. The school is not currently listed by Fraser Health as having COVID-19 exposures. (Neil Corbett/The News)
Four more Maple Ridge/Pitt Meadows schools exposed to COVID-19

Cases at three public schools and Maple Ridge Christian

Restaurant patrons enjoy the weather on a patio in Vancouver, B.C., Monday, April 5, 2021. The province has restricted indoor dining at all restaurants in B.C. due to a spike in COVID-19 numbers. THE CANADIAN PRESS/Jonathan Hayward
B.C.’s COVID-19 indoor dining, drinking ban extending into May

Restaurant association says patio rules to be clarified

B.C. Premier John Horgan speaks at the B.C. legislature. (B.C. government)
Tougher COVID-19 restrictions in B.C., including travel, still ‘on the table’: Horgan

John Horgan says travel restrictions will be discussed Wednesday by the provincial cabinet

Protesters occupied a road leading to Fairy Creek Watershed near Port Renfrew. (Submitted photo)
B.C. First Nation says logging activist interference not welcome at Fairy Creek

Vancouver Island’s Pacheedaht concerned about increasing polarization over forestry activities

Flow Academy is not accepting membership applications from anybody who has received a dose of the vaccine, according to a password-protected membership application form. (Submitted image)
B.C. martial arts gym refusing patrons who have been vaccinated, wear masks

Interior Health has already issued a ticket to Flow Academy for non-compliance with public health orders

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Of 46 arrests made between March 16 and 19 at Metrotown mall in Burnaby, 27 suspected shoplifters are now facing charges. (Twitter/Burnaby RCMP)
RCMP arrest 46 people in 4 days during Metrotown shoplifting crackdown

$4,800 in stolen merchandise was recovered and returned to businesses inside of the mall

Kao Macaulay has been charged in relation to a home break-in on March 30 in Abbotsford in which five kittens were stolen. (Facebook photo)
‘Prolific offender’ charged with theft of 5 newborn kittens in Abbotsford

Kao Macaulay, 23, is accused of breaking into home on March 30

Sheila Malcolmson, B.C.’s minister of mental health and addictions (Screen shot)
Minister of mental health tells Surrey audience COVID-19 ‘has made everything worse’

More than 23,000 people in B.C. are receiving medication to treat opioid addiction

Facebook screenshot of the sea lion on Holberg Road. (Greg Clarke Facebook video)
VIDEO: Sea lion randomly spotted on remote B.C. logging road

Greg Clarke was driving home on the Holberg Road April 12, when he saw a large sea lion.

Most Read