EDMONTON – Premier Rachel Notley discusses the case for imposing industry-wide oil production cuts in a letter to Albertans ahead of a scheduled news conference.
The provincial government says Notley will speak to reporters Sunday evening about the next steps to ensure Albertans get the best possible value for their energy resources.
The premier has also released an op-ed piece where she says the province must act now to deal with a growing glut of oil she blames on a lack of pipeline capacity.
Notley says in the letter that there are two competing ideas for short-term relief — either let the market sort itself out, risking possible job losses and business closures, or intervene and temporarily restrict oil production.
The premier was asked about production cuts following a speech she made to the Toronto Board of Trade on Thursday, but wouldn’t say whether she was for or against the idea.
Her op-ed letter says her government’s decision will be announced Sunday.
“While a consensus appears to be forming among some political leaders, no such consensus exists within industry. At this point, no industry consensus is expected,” Notley’s letter states.
“So, Alberta, it comes down to what is best for us, all 4.3 million of us, the owners of our oil resources. As owners, we have an obligation to get the most value possible.”
The letter says 35 million barrels worth of Alberta oil is sitting in storage. As a result, the price of Alberta crude is sitting around $10 a barrel, which Notley says is a fraction of what other world producers are getting. She said it means Alberta is losing $80 million per day.
The premier has already said the province will buy as many as 80 locomotives and 7,000 rail tankers — expected to cost hundreds of millions of dollars — to move the province’s excess oil to markets, with the first shipments expected in late 2019.
But she says in her letter that rail cars, new pipelines and increasing domestic refining capacity won’t bring relief soon enough.
“We need to do more and do it now,” Notley writes. “Neither choice is without downsides.”
Cenovus Energy proposed the idea of a production cut last month and the idea is being supported by opposition politicians in Alberta, including United Conservative Party Leader Jason Kenney.
However, Imperial and Husky said Friday they remain opposed to involuntary production cuts but support the rail investments because they could help to improve market access.