Page 4 - NorthAmOil Week 37

NorthAmOil COMMENTARY NorthAmOil
Alberta may exempt crude-
by-rail shipments from
output curtailments
The Alberta government is considering allowing producers to exceed the province’s output restrictions if they are able to ship the additional barrels by rail, writes Anna Kachkova
NORTH AMERICA
WHAT:
The Alberta government may grant exemptions to output restrictions for barrels being shipped by rail.
WHY:
Alberta Premier Jason Kenney has said the sale of provincial crude- by-rail contracts is progressing.
WHAT NEXT:
Canadian oil could become more attractive to buyers as security of supply becomes a bigger priority.
ALBERTA Premier Jason Kenney said this week that his government could allow oil producers to exceed provincial output restrictions if they can ship the extra barrels by rail. The comments come after Alberta’s United Conservative Party (UCP) government said in late August that it was extending mandatory curtailments on pro- vincial crude production by another year, to the end of 2020, in an effort to prop up oil prices. The extension was attributed to ongoing uncertainty over the timetable for major new pipelines out of the province starting up, as additional takeaway capacity will boost regional prices.
The UCP government continues to pursue a sale of crude-by-rail contracts taken on by its predecessor, the New Democratic Party (NDP), which was voted out of office in April, and indeed, plans to grant exemptions for rail ship- ments are tied to this planned sale.
Kenney told Bloomberg in New York this week that Albertan Minister of Energy Sonya Savage was in “very serious discussions” with producers this week over the potential
exemptions. He added that the sale of the gov- ernment’s crude-by-rail contracts was progress- ing, and had attracted 16 bids.
“If we can find a way out [of] that, we think [we] can very likely find a way forward to exempting incremental crude by rail from curtailment through special production allow- ances,” Kenney said.
Secure supply
The premier also used his New York visit to emphasise the fact that Alberta is a secure source of oil supply following this weekend’s attack on Saudi Arabian oil facilities that took 5.7mn bar- rels per day (bpd) of production offline. (See next story) “The strike on Saudi refineries should be a wake-up call,” Kenney wrote on social media.
While Saudi is seeking to restore production as quickly as possible, the outage represents around 5% of global supply. Saudi’s Khurais oil- field produces light oil, while Alberta’s output is primarily heavy crude from its oil sands. None- theless, Kenney has been keen to portray Alberta
Alberta Premier Jason Kenney is trying to promote Canada, and his province, as a source of secure supply.
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Week 37 17•September•2019