Notley Leaves Alberta Oil Industry Hanging on Output-Cut Idea
(Bloomberg) -- Alberta Premier Rachel Notley reiterated her call for Canadians to support new oil pipelines and improve two energy bills at a speech in Toronto, but made no mention of whether she’ll mandate crude-production cuts.
Suffering from record-low prices because of a supply glut, many producers in the oil-rich province have been asking Notley to mandate a temporary curtailment that would help reduce the amount of crude in storage. Notley told Canada’s CTV News on Wednesday that an announcement on the issue is coming “in the very immediate term,” raising some expectation that she’d announce the move at her Toronto speech.
“We’ve been meeting with industry officials and experts for several weeks now and we’re trying to dig into finding the best resolution,” she told reporters in Toronto on Thursday. “You can expect an announcement from us very soon. It is complex, the nature of the industry is more complex than it once was.”
The S&P/TSX Energy Index tracking Canadian producers rose 1.7 percent in Toronto on Thursday, compared with a gain of just 0.6 percent for the S&P 500 Energy Index of U.S. stocks.
Notley has previously said that her administration is studying the output-cut idea and hasn’t ruled it out. Her main political rival, United Conservative Party Leader Jason Kenney, came out in favor of an output cut on Wednesday.
Here’s how the crude market is reacting in anticipation of Alberta output cuts
While companies including Cenovus Energy Inc. and Canadian Natural Resources Ltd. have said government-mandated production cuts would help the industry, integrated producers whose refineries are benefiting from the cheaper feedstock have opposed it.
In the meantime, Notley announced on Wednesday that Alberta will 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. Notley offered more details of the plan on Thursday, saying that it entails running two additional trains a day, each pulling 100 to 120 cars. That would require a total of about 80 locomotives and more than 7,000 cars, she said.
“There is value to this investment and not only from the most immediate perspective, but also as a hedge against further pipeline delays,” Notley said on Thursday.
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