Alberta will continue constructing new refineries. The oil-rich Canadian province seeks to weather a crude price crunch, while a forced production cut remains an option.

Alberta premier Rachel Notley stated she would announce a program to expand “made in Alberta” crude upgrading and refining in the coming days. Besides, she has picked three envoys to work with the industry and the federal government. They will aim to make a settlement for the dramatic discount earned for domestic oil. She also added that no option has been discarded concerning mandating a production curtailment to help raise prices.


“At this point, all I will say is that there are some options in the suite of options and there is no option that has been taken off the table at this point,” Notley said at a news conference in Edmonton.

Canadian crude is trading at an all-time low price. That is amid pipeline bottlenecks, rising inventories and a decline in global oil prices. The Western Canada Select benchmark came down to under $14 a barrel last week. The undercut prices have pushed some oil companies including Canadian Natural Resources Ltd. to curtail production. Some companies consider that Alberta’s government should require companies to cut output.

The discount that Canadian producers get for their heavy crude compared to the West Texas Intermediate benchmark, of about $40 a barrel, is worth $60 million per day to the Canadian economy.


“While more pipelines and rail capacity are the long-term solution, we continue to believe that the only effective way to address wide differentials in the short term is through temporary industry-wide production cuts, which can only be mandated by government,” Cenovus stated.

Cuts equaling between 200,000 and 300,000 barrels a day would benefit all the companies. That includes the integrated oil producers who export more than they process in their refineries. Tim Pickering, the founder of Auspice Capital Advisors Ltd., also claims it’s the only immediate, short-term solution.