Page 9 - NorthAmOil Week 41

NorthAmOil COMMENTARY NorthAmOil

Recovery remains

elusive for Alberta

Alberta’s oil output remains below what it was

prior to the COVID-19 pandemic and the path

forward looks increasingly challenging for the
province’s producers

ALBERTA THE embattled oil and gas industry in the Cana- out of favour as a resource on environmental
dian province of Alberta continues to struggle grounds – despite the attempts by producers in
WHAT: to return production to levels seen at the start the region to talk up their successes in lowering
Alberta’s oil output of this year. This week, Alberta Energy Minister carbon emissions from their operations.
remains below pre- Sonya Savage told the Energy Intelligence Forum Thus while Savage is right that both oil prices
pandemic levels. on that the province’s oil production was still and demand need to pick up in order for the oil
16% below what it was before the coronavirus sands to recover fully, there is a broader ques-
WHY: (COVID-19) pandemic hit. tion over whether they will recover at all.
The province’s oil sands This marks a slight recovery from the peak of
were already struggling the downturn earlier this year, when Alberta’s Ongoing struggle
with low prices before oil output was down by 22% – or 880,000 barrels The most recent official statistics from the Cana-
this year’s downturn. per day (bpd) – as producers curtailed volumes dian Centre for Energy Information show that
in response to collapsing crude prices. the country produced 3.76mn bpd in July, with
WHAT NEXT: “It is coming back online slowly,” Savage said. most of this coming from Alberta. However,
Suncor Energy is courting She added that a full recovery in Alberta’s oil Western Canadian Select (WCS) crude was trad-
government investment sands would require both higher crude prices ing at around $32 per barrel on October 9.
in decarbonisation and a rebound in demand in the US, which buys While this marks a significant recovery from
initiatives. around 97% of Canada’s oil exports. the low of $8 per barrel that it sank to in April, it
Western Canadian heavy crude trades at a remains below the levels it was at in early Janu-
discount to US grades such as West Texas Inter- ary – around $40 per barrel. And indeed, those
mediate, and Alberta’s producers had already levels were not considered sufficient to spur sig-
been struggling since the last downturn began nificant new investment in the oil sands either.
in 2014, before market conditions worsened Meanwhile, the list of investors shunning
significantly this year. This has all been exac- the oil sands on environmental concerns has
erbated by the oil sands increasingly falling continued to grow. In May, Norway’s sovereign

Alberta Energy Minister
Sonya Savage says the
province’s production is
returning slowly.

Week 41 15•October•2020 www. NEWSBASE .com P9