Oil prices have been making headlines after Canadian crude dropped as low as US$14 a barrel earlier in November.
The Alberta government hopes to roughly cut in half the 35 million barrels of oil now sitting in storage across the province - a reduction that analysts said could be achieved in a matter of months.
"Investors will definitely worry that this is a slippery slope, and that the government can curtail production or interfere in business to pick winners and losers", Ollenberger said in an interview. "Ottawa's failure in this area has left Alberta's energy producers with few options to move their products, resulting in serious risks for the energy industry and Alberta jobs", the Alberta government says.
Shares of Canadian oil producers are skyrocketing on Monday, led by Canadian Natural Resources (NYSE: CNQ), Cenovus Energy (NYSE: CVE), Baytex Energy (NYSE: BTE), and Crescent Point Energy (NYSE: CPG), which were all up double digits by 10:00 a.m. EST. Last month, oil sands producers asked the Premier to mandate industry-wide production cuts.
The government is buying railcars to increase shipments to offshore markets by 120,000 barrels per day before the end of 2019 in order to get around the "transportation bottlenecks" that have crippled the Canadian oil market in 2018.
Output of raw crude oil and bitumen will be reduced initially by 325,000 barrels per day.
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"They don't feel it will actually be effective in narrowing the differential". That narrower discount is now much more likely given the production cut.
The production curbs will provide some cushion for producers, but will not eliminate the discount on heavy Canadian oil that has persisted for many years, said Jihad Traya, manager at energy consultancy firm Solomon Associates LLC in Calgary.
In 1980, then-Premier Peter Lougheed forced cuts to protest a national energy program that he said would have harmed the province's oil industry. Husky Energy Inc., which owns refineries in Canada and the US, said in an emailed statement that a government-ordered curtailment or other interventions can possibly have negative investment, economic and trade consequences.
Executives from Canada's Suncor Energy Inc, Husky Energy Inc and Imperial Oil Ltd, integrated producers with domestic refinery and upgrading capacity, expressed disappointment, however, saying they prefer market solutions to the problem.
Canada produces some 4.6 million bpd and exports about 3.3 million bpd to the United States, about 99 percent of Canada's total crude exports. "I was at her Christmas party on Sunday night so we had a good chance to chat about it".
"Our oil production and market for our product is significantly different than Alberta's".
Still, MacNaughton says he has reached out to his counterpart Kelly Craft to emphasize the cuts are only temporary and that Canada does not feel they violate existing free-trade rules.