Suncor Energy is assessing the impact of the provincial government’s decision to curtail oil production in 2019.
Premier Rachel Notley announced Sunday, the temporary measure is in response to the historically high oil price differential – that she says is costing the national economy more than $80 million per day.
“Every Albertan owns the energy resources in the ground, and we have a duty to defend those resources. But right now, they’re being sold for pennies on the dollar. We must act immediately, and we must do it together,” said Notley in a statement.
Under the new action, production of raw crude oil and bitumen will be reduced by 325,000 barrels per day to address the storage glut, representing an 8.7 per cent reduction.
After excess storage is drawn down, it will then drop to 95,000 barrels a day until December 31, 2019 – when the rules supporting this action end.
In a release Monday, Suncor says the specific impact of the production cut will be provided when they issue its 2019 capital and production guidance.
“Suncor believes the market is the most effective means to balance supply and demand and normalize differentials. Less economic production was being curtailed and differentials were narrowing as a result of market forces,” the statement reads.
The price differential for Western Canadian Select versus West Texas Intermediate has been around $30 to $50US recently, peaking at $52 in October.
The province estimates the production cuts will narrow the differential by at least $4 per barrel and add an estimated $1.1 billion of government revenue in 2019-20.
“I can’t promise the coming weeks and months will be easy, but I can promise we will never back down in our fight to protect jobs and the resources owned by all Albertans. I will never stop fighting for Alberta,” added Notley.
The Alberta Energy Regulator will implement the reductions starting in January 2019.