Stop with the sympathy and take action, Notley urges Ottawa on oil prices

Premier Rachel Notley took shots at Ottawa as she addressed her cabinet Monday prior to a meeting where they will officially approve Alberta’s newly announced oil production cuts.

'We need them to step up and help us bring in an end to this crisis,' Alberta's premier says

Alberta Premier Rachel Notley speaks to cabinet members in Edmonton Monday about an 8.7-per-cent oil production cut to help deal with low prices. (Jason Franson/Canadian Press)

Alberta Premier Rachel Notley took shots at Ottawa as she addressed her cabinet Monday before a meeting where Alberta's newly announced oil production cuts were approved.

"We need them to toss the half-hearted statements away," Notley told her ministers.

"We don't actually need Ottawa's sympathy. We need Ottawa's full attention. We need them to step up and help us bring an end to this crisis."

Notley's remarks reflected her frustration over what she thinks is inaction by federal government on getting Alberta crude to the west coast.

Temporary production cut

On Sunday, she announced a temporary 8.7-per-cent cut in the production of raw crude and bitumen starting Jan. 1, 2019.  

The measure is aimed at closing the oil price differential, which the government says is costing the Canadian economy more than $80 million a day.

Cabinet approved the measures, giving Energy Minister Marg McCuaig-Boyd the power to direct the Alberta Energy Regulator to enact the production cuts. 

The amount will be revisited each month to ensure the province isn't cutting production more than it has to, Notley said.

The gap in price between Western Canadian Select crude and the West Texas Intermediate benchmark widened to historic amounts this fall.

'Fire sale' prices on Alberta crude

Alberta is blaming oversupply and a lack of pipeline capacity for what Notley has called "fire sale" prices for Alberta crude.

There are currently 35 million barrels of processed oil sitting in storage awaiting transport out of the province.

The daily cuts of 325,000 barrels would remain in place until the stored oil is shipped to market, likely by the spring.

The reduction will drop to an average of 95,000 barrels a day until curtailment ends at the end of 2019, when Enbridge's new Line 3 pipeline to the U.S. Midwest starts operating.

Province to buy its own rail cars

The Alberta government also expects to buy locomotives and rail cars by that date to transport 120,000 barrels a day.

Notley wants the federal government to help with the costs but said the province will go it alone, if necessary. Negotiations are already underway to buy the equipment.

Alberta had been in discussions with Saskatchewan about whether it would enact its own production cuts.

Premier Scott Moe said Saskatchewan, unlike Alberta, has no oilsands in active production and produces mostly light and medium crude, so a curtailment would hurt more than it would help. 

"A government-mandated production cut in Saskatchewan could result in a loss of jobs and economic activity in our province, but would have little impact on the price of oil because it would disproportionately impact conventional oil production, which is not the problem," he said. 

Jason Kenney, leader of the opposition United Conservative Party, had called on Saskatchewan to join Alberta in implementing production cuts. 

Notley told Kenney in Monday's Question Period that Alberta's curtailment actions should work without Saskatchewan's participation. 

"If they joined us, that would be great but it's not actually necessary," Notley said.