Canada's Plan to Cut Oil Output Boosts Crude, Stocks

Notley says Alberta's resources are being sold for "pennies on the dollar" and she has ordered oil producers to slash production by 8.7 percent in an attempt to shore up prices. She says a price crisis is costing Canada about $80 million a day.

Alberta's government on Sunday announced a 325,000 barrel per day production cut due to massive bottlenecks in pipelines heading to the United States.

"Many of these policies (were) supported either by acquiescence or actively by the NDP government", said Kenney.

Kenney said that not all of Saskatchewan's oil production would be affected.

In addition to her government's plan to manage the supply of Alberta oil to narrow the yawning gap between oilsands bitumen and the sweeter crude found closer to the U.S. Gulf Coast, she promised more rail cars would be coming on line next year and that there will be no end to the province's push for more pipeline capacity. Some producers had already been slightly curtailing output in recent weeks because of painfully low prices, but there is a first-mover problem that goes into this thinking.

"Yesterday's announcement will protect our revenues and our path to balance is assured". Small producer Whitecap Resources Inc. now doesn't plan to cut any jobs as a result of the Alberta plan, Chief Executive Officer Grant Fagerheim said in an interview.

Announcing the measure on Sunday, Premier of Alberta Rachel Notley said that the province is "facing a hard challenge", but the move is aimed to reverse an unprecedented price gap that has seen the province's crude sell for significantly less than the global price. "Our government has shown time and again that despite the fact that we're trying to work with the federal government and we call on them for action, when the line on the other end is silent, we're not about to wait for them".

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The curtailment plan, which will apply to both oil-sands and conventional producers, should narrow the discount between Western Canada Select and US benchmark oil by at least $4 a barrel and add an estimated C$1.1 billion ($840 million) in government revenue in the fiscal year starting April 2019, according to the statement.

"This is a time for unity and for resolve", said Notley on Monday.

"I want to be clear".

"We would hope that producers outside of Alberta would understand that they would need to be part of the solution in saving jobs".

One of the few viable remaining pipeline projects, the Trans Mountain pipeline, was purchased by the federal government earlier this year for $4.5-billion in a bid to push through a long-planned expansion of the conduit. They are the safest and best mode of transport to get our product to tidewater.

"With so much oil just sitting there, unable to be moved, it is being sold at fire-sale prices, around $10 a barrel", she wrote.

"If we see that the differential shrinks significantly and that imposing a curtailment is not necessary for the full twelve months then we'll adapt", said Bilous.

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