TORONTO / WINNIPEG, Manitoba (Reuters) – Canada’s steep cut in oil production is expected due to falling oil prices, the country’s two main energy companies said on Tuesday.
PHOTO PHOTO: Oil pump jack pumping oil in a field near Calgary, Alberta, Canada on July 21, 2014. REUTERS / Todd Korol / File Photo
Around 20-25% of West Canada’s crude oil production can be closed during the current second quarter, said Enbridge Inc’s Chief Executive Al Monaco. Western Canada produces around 4.5 million barrels per day in March, according to the Canadian Energy Regulator.
The estimate is in line with estimates of 1.1 million to 1.7 million barrels from the Royal Bank of Canada last week. Around 135,000 barrels per day have been cut so far, according to TD Securities.
Saudi Arabia, Russia and allied oil producers will only approve deep cuts in their crude production at talks this week if the United States and several other countries join the restrictions to help prop up prices that have been hammered by the coronavirus pandemic, OPEC sources. told Reuters on Tuesday.
Oil sands producer Cenovus Energy Inc. has reduced production at the Lake Christina oil sands operation by 40,000 to 45,000 barrels per day and has the capacity to cut more if needed, Chief Executive Alex Pourbaix said on Tuesday. The company can suspend production of more than 100,000 barrels per day in all of its operations without damaging the asphalt reservoir, he said.
“We think we can go beyond that if necessary and we can maintain it for months,” he said at the Bank of Nova Scotia virtual conference. Pourbaix reiterated support for further Alberta government restrictions to avoid a storage crisis and said global coordination about abatement might be needed to ensure the sustainability of a sustainable industry. “It is very difficult for anyone to argue that they are getting unexpected profits” at current prices, he said.
Even so, the queue for the oil sands expansion project has stalled in recent years due to a blocked pipe, the problem is now being resolved with three ongoing projects, including Enbridge’s Line 3, Monaco said.
“After a normal request, I think the (Western Canada) basin will be in good condition. We will see a resurgence in good volume. ”
The Canadian Province of Alberta, which is home to the third largest oil reserves in the world, regularly makes contact with OPEC Secretary General Mohammad Barkindo on solutions to restore the balance of the oil market, said Alberta Energy Minister Sonya Savage.
“I think there is worldwide recognition that this is not sustainable,” he said.
Reporting by Jeff Lewis in Toronto and Rod Nickel in Winnipeg, Manitoba; Editing by Sandra Maler and Bernadette Baum