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NorthAmOil COMMENTARY NorthAmOil
Tough times for Alberta
Alberta’s oil producers are battling to survive a particularly
challenging year, and the province is now considering ways
to embrace greener industries, with implications for the
provincial oil industry’s future
ALBERTA THIS year has, unsurprisingly, been an extremely prevailing market conditions meant that the
challenging one for Alberta, whose embattled oil new government struggled to boost the indus-
WHAT: and gas industry was already struggling before try. Indeed, it initially extended mandatory
Alberta’s oil producers the coronavirus (COVID-19) pandemic exac- provincial oil production curbs put in place by
are facing an increasingly erbated the latest collapse in crude prices. The the previous New Democratic Party (NDP) gov-
uncertain future. combination of restrictions related to COVID- ernment, even as it lowered the level of required
19 and the oil price downturn are expected to curtailments. The decision was a bid to keep
WHY: result in the province’s economy contracting by propping up Western Canadian Select (WCS)
They were hit hard by this 8.1% this year – the most on record. Indeed, new crude prices. The Alberta government finally
year’s industry downturn, COVID-19 restrictions announced this week decided in late October 2020 that it would lift
and now the province is threaten to slow oil industry recovery efforts. the curbs one month ahead of schedule, at the
exploring ways to develop Meanwhile, the province is increasingly start of December 2020, as around 16% of the
greener industries. exploring how it can embrace greener indus- province’s production remained offline. Out-
tries as the energy transition picks up pace. This put shut-ins, largely related to COVID-19 and
WHAT NEXT: is thought by some to pose a threat to the very its impact on oil demand and prices, tempo-
The latest surge in existence of Alberta’s oil industry, though others rarily helped to ease pipeline congestion in the
COVID-19 infections is contend that oil and green industries can co-ex- province.
resulting in new lockdown ist and even complement each other. In a rare piece of good news for Alberta’s
measures, which could producers, Enbridge’s Line 3 replacement pipe-
complicate the industry’s Heavy hit line project recently received its final clear-
recovery. At the start of 2020, there were already warn- ance to cross northern Minnesota. The Line 3
ings that Alberta’s oil industry – a major part of replacement segments that cross Canada, North
which is comprised of oil sands megaprojects – Dakota and Wisconsin are already complete,
was in for another tough year. Oil prices had still leaving only the 337-mile (542-km) stretch in
not fully recovered from the last price collapse, Minnesota. This puts the project comparatively
which began in 2014, and new takeaway capac- close to completion, and means that takeaway
ity expansion projects continued to face delays, capacity constraints will not be as much of a
adding further downward pressure on regional pressing issue for some time, especially given
crude prices. that work on the Trans Mountain expansion
The United Conservative Party’s (UCP) vic- project to the British Columbia coast is also
tory at the provincial polls in 2019 was seen as under way.
a positive for the Alberta energy industry, but Even with more takeaway capacity options
Week 49 10•December•2020 www. NEWSBASE .com P9