3 experts will work with Alberta energy industry to find oil price gap solution
Alberta Premier Rachel Notley has appointed three experts to work with the energy industry to find ways to close an oil price gap that she says is costing the Canadian economy $80 million a day.
Notley says Canada is losing out because oil from Alberta is selling about $45 a barrel less than West Texas Intermediate in the United States.
“We will lose that $80 million tomorrow and the day after and the day after, as long as this price differential remains in place,” she said at the legislature on Monday.
“Make no mistake, this price gap is a real and present danger to the Canadian economy.”
Notley said the differential is due to a lack of pipeline capacity to move a growing glut of Alberta oil to markets.
“We should be shipping our oil through pipelines to new markets around the world,” she said.
“Owing to decades of failure by successive Canadian governments, Canada is holding its own economy hostage and… holding Alberta’s economy hostage.”
The premier is travelling to Ottawa and Toronto next week to make her case.
The experts are Robert Skinner of the University of Calgary’s School of Public Policy, deputy energy minister Coleen Volk and Brian Topp, Notley’s former chief of staff and a policy consultant. Notley is giving them two to four weeks to report back to her.
Last week, Cenovus Energy and Canadian Natural Resources called for government-imposed temporary cuts until the oil glut clears up, but others including Suncor Energy and Husky Energy have rejected the idea.
Notley said no option is off the table.
Cenovus said in a statement that it’s encouraged by Notley’s announcement, but time is of the essence.
“While more pipelines and rail capacity are the long-term solution, we continue to believe that the only effective way to address wide differentials in the short term is through temporary industry-wide production cuts, which can only be mandated by government,” said the company.
Rich Kruger, chief executive officer with Imperial Oil, said he welcomes a meeting with the panel but won’t back a “short-term market manipulation” of production cuts.
“It is the lack of market access or sufficient market access that has put us in this position,” Kruger said.
“Our view is we have to focus on the underlying issue which is, ultimately, expanding market access.”
Notley said the price differential is an even bigger issue than the oil price roller-coaster Alberta has been dealing with for decades.
“Price spikes and price dips are one thing and, quite frankly, Albertans are used to that. But this is different. In the face of this punishing differential brought about by too few pipelines, we must do what we can to close this differential as much as we can.”
“Everything that we do short of building new pipelines and getting more value from our resources is not a long-term fix.”
Alberta must upgrade and refine more of its energy products at home, Notley, said, so she has also established a team to look for ways to develop new oil and natural gas processing plants in Alberta.
“Alberta is being treated as a branch plant for the U.S. and it’s got to stop,” she said.
–With files from The Canadian Press’ Dan Healing
Source: Global News