Alberta Premier Rachel Notley further increased tar sands oil production Monday, based on monitoring a number of indicators and recognizing that less diluent is needed in warmer weather for bitumen to flow in pipelines, meaning more capacity.
“Production limits in May will increase by 25,000 barrels a day and 25,000 more in June – a 50,000 increase in total to 3.71 million barrels per day allowed, effective June 1. This represents a total increase of 150,000 barrels a day since the start of the production limit policy on Jan. 1,” the announcement read.
The increase in production was partly due to the discount of WCS to WTI staying below US$15 a barrel, compared to more than a US$40 differential in the fall of 2018. However, Canada’s oil industry is still divided over the cuts. Some companies, like Cenovus Energy, have argued for all-around cuts.
Other companies – including Imperial Oil, Suncor Energy, and Husky Energy were against all-around cuts. These companies have been against the Alberta government’s interference in the free market. reports Oil Price.
Ultimately this is about building our country. Not dividing it.
Not long ago, 4/10 Canadians supported #TransMountain. Today, 7/10 do.
If we continue to unite Canadians around the need for #TMX, I have no doubt we will get it built.#MadeInAlberta #KeepCanadaWorking #ableg pic.twitter.com/HkUl5Idons— Rachel Notley (@RachelNotley) February 22, 2019
Setbacks in March
Last week, the U.S. Court of Appeals for the 9th Circuit denied yet another attempt by TransCanada to begin construction on its proposed Keystone XL pipeline, upholding a Montana judge’s ruling barring construction of the Keystone XL oil pipeline from Canada.
In a second blow to the industry, ExxonMobil affiliate Imperial Oil announced it was delaying a new C$2.6 billion ($1.9 billion) tar sands project in Alberta, likely by a year. The 75,000-barrel-a-day Aspen project was expected to come online in 2022, but Imperial has decided to slow the pace of development due to future government actions and market conditions.
Another pipeline, the proposed Trans Mountain expansion, which would increase capacity of an existing line that runs to the Pacific, is facing legal battles in British Columbia.
All these setbacks have affected the industry’s outlook. The International Energy Agency (IEA) said last week that it expects Canadian oil output – dominated by the tar sands – to grow only marginally to 2024, to 5.5 million barrels per day.
The white elephant in the room – pipelines, or the lack of enough pipelines – still looms large, and is a determining factor on whether the oil industry will recover in Canada.
