It’s no big surprise to anyone following oil & gas news that Canada has been suffering from pipeline restrictions and really needs to expand to handle the supply. Last weeks oil spill highlighted the need for new infrastructure in the Canadian Oil & Gas field.
The Keystone pipeline which runs from Canada to the US had an oil spill of around 9,000 barrels of crude in North Dakota. Partial service is expected on the pipeline by Tuesday, but it’s just another kick in the pants for Canadian drillers who believe that the lack of means to get the oil out of Canada is hampering the Canadian Oil Industry.
Albertan government, in an effort to aide the Industry has announced it is lifting existing production limits… with the proviso that they move additional barrels by rail.
Encana Corp. announced it is relocating its headquarters from Canada to the US, maybe not a coincidence that this comes on the heels of the recent election. With plans to rebrand the company under the name Ovintiv Inc the company shared a news release late last month on their website which included this quote ” A domicile in the United States will expose our Company to increasingly larger pools of investment in U.S. index funds and passively managed accounts, as well as better align us with our U.S. peers. “
Which is a lot nicer than the comment by Alberta’s energy minister Sonya Savage in which she allegedly blamed “harmful policies in Canada” for the company’s decision to relocate to the U.S.
In recent years several major pipeline projects for the Canadian Oil Industry have been stopped in their tracks. A moratorium on oil tankers , cancellation of the Northern Gateway pipeline and Energy East pipelines all serve to hit Canadian Oil hard.
You can read more below
By Tsvetana Paraskova – Nov 08, 2019, 4:00 PM CST
Oil producers in Alberta can drill new wells without being restricted by the current industry-wide production limits, the government of Alberta said on Friday as it aims to spur investment into Canada’s embattled energy industry.
The lifting of the restrictions for new wells takes effect immediately, while production from existing wells will continue to be under curtailment, as per Alberta’s government schedule.
By allowing operators to drill new wells outside the production limits, the provincial government hopes to “drive positive investment, lead to increased drilling activity, and support economic growth in communities across Alberta.”
The new policy applies to all conventional oil producers, while existing wells remain subject to the production cuts across Alberta’s oil industry.
“Companies are currently making investment decisions and we want those dollars and jobs to be in Alberta. We are doing everything we can to help,” Sonya Savage, Alberta’s Minister of Energy, said in a statement.
Canadian producers have had a tough couple of years with constrained market access that drove the price of Western Canadian Select (WCS)—the benchmark price of oil from Canada’s oil sands—to a discount of US$50 to WTI Crude in the fall of 2018. This blow-out in the differential between the Canadian benchmark and the U.S. benchmark prompted Alberta’s government to impose at the beginning of 2019 a mandatory production cut to help ease congested takeaway routes and lift the abnormally low price of Canadian oil.
Last week, Alberta allowed, as of December, energy firms to produce more oil despite production cuts, if those firms move the additional barrels by rail, as continued pipeline capacity shortage dampens the prospects of Alberta’s oil and gas sector.
Canadian energy companies continue to believe that the long-term solution to Canada’s oil industry’s woes is the construction of major new pipelines to increase market access, and potentially, to tap new export markets outside the buyer of nearly all Canadian oil exports, the United States.
By Tsvetana Paraskova for Oilprice.com
Canadian Oil Prices Set To Rise As Keystone Restarts
Canadian Oil Companies Can Boost Production… On One Condition
Canadian Oil Prices Crash After Keystone Spill
Major Canadian oil and gas producer moving HQ to U.S.
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