Imperial Oil slams Notley's cuts as 'negative message to investors'


To that end, Saskatchewan Premier Scott Moe responded on December 3, saying in an emailed statement, "The action taken by the Government of Alberta to cut oil production in the face of an unacceptably high differential for Western Canada Select oil reflects the crisis that Western Canada's energy sector has faced for far too long".

Kruger said his company "respectfully disagrees" with Notley's decision late Sunday to mandate production cuts that will curb provincial oil output by 8.7 per cent in a bid to narrow the discount on Canadian oil prices, and will comply with the decision after reviewing the details.

The discount between Western Canadian Select bitumen-blend oil and New York-traded West Texas Intermediate was about US$21 per barrel on Monday morning, an improvement of about US$7 per barrel from Friday, according to Net Energy. Bloomberg reported that the benchmark for heavy oil, Western Canadian Select, jumped to $43.40 (CAD) a barrel, from $14.48.

In an announcement Sunday evening, Notley said the daily cuts will remain in place until the 35 million barrels of processed oil now in storage is shipped to market, likely by the spring.

A wider-spread collapse in oil prices could wash away much of the gains from Alberta's production cuts, several analysts said Monday.

Saskatchewan Premier Scott Moe said in a statement that the province isn't considering following Alberta's example.

The short-term production cuts, permitted under the province's legislation, will take effect on New Year's Day, the premier said.

Shippers and refiners are moving discounted barrels of oil via rail or trucks, but the storage glut sits at more than 35 million barrels in Alberta, just below all-time records set in September, according to data firm Genscape.

Canadian crude producers saw a spike in early trading Monday, as did heavy oil prices.

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The Alberta government has ordered a mandatory cut to crude oil production next year to deal with historically low prices being paid for Canadian oil.

The companies hope that reducing production will boost regional oil prices as well as their profitability.

"We request that Energy Market Access and the Economic Impacts of the Price Differential be added as an agenda item for discussion this week".

So, Notley's short news conference Sunday evening was a bravura performance.

Moe said the province will continue to advocate for the federal government to create a long-term solution by building pipelines so both provinces can "sell our oil for what it is worth". Shares of oil producers operating in Alberta also surged, with Cenovus posting its biggest intraday gain ever.

"The amount of oil that is being diverted to storage is at record highs and storage is nearing capacity", the Alberta government says. The government estimates Alberta is losing $80 million a day due to the discount.

"Industry as a whole should have a lot more rail capacity than we do right now, and we should have thought about it years in advance", she said.

Opposed to the cuts, Suncor says authorities should let the market regulate itself. "The poor finish to Q3 GDP had already put our call for a January rate hike by the Bank of Canada at risk, so we'll need to see some healthy readings for other sectors in the next few weeks to leave that view intact".