Sunday , October 17 2021

Imperial Oil CEO says Alberta has won winners and losers with production restrictions

Rich Kruger, President and CEO of Imperial Oil, collaborates with the media after the company's annual meeting in Calgary on 29 April 2016.

Jeff McIntosh

The production restrictions imposed by Alberta have destroyed the rail transport economy, and Imperial Oil Ltd. announced on Friday. he headed the government, where he claimed that the industry had a "winning and losing" choice.

The excuse for the company is that several major manufacturers are increasing their criticism of foreclosure policies, and as the industry is increasingly ready to consider provincial policies and the spring election campaign. The NAP Government had already faced the pressure of Canada's Natural Resources Ltd (CNRL), which on Friday refused to shut down one of its pipelines for calculating individual production constraints on companies.

The Emperor Chief Executive Rich Kruger used a fourth-quarter earnings call with investors to resolve this policy, which he believed created uncertainty for investors and undermined the industry's ability to use rail transport to reduce pipeline backlogs.

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"With the pen strokes the government started winners and losers," he said. "We think this action is unfair, anti-competitive, and does not reflect the free economy in today's democracy."

As the reduction policy came into force at the beginning of the year, the difference between Alberta oil and the West Texas intermediate, which increased $ 50 ($ 65) last fall, has dropped to around $ 10.

Kruger said it had removed a business case to send crude oil by rail, and he said it would need a difference of $ 15 and $ 20. In December, the company sent 168,000 barrels per day by rail, but he said that the February Imperial railway will be "zero or close to zero".

"Today the differences have collapsed and the incentive to move crude oil by rail has been erased," said Kruger.

Prime Minister Rachel Notley intends to plan to buy rail cars on oil and admits that the price difference will have to be expanded to be realistic.

The Minister of Energy, Margaret McCuaig-Boyd, was not available to comment, but a ministerial representative, Mike McKinnon, sent an email that defended the policy. The Communication states that production constraints are "fair and equitable" and that the government expects the difference to take place at a more sustainable level.

The response to the containment policy in the sector has been mixed, for integrated producers with refining capacity and benefiting from low prices opposing the measure. Imperial, Suncor Energy Inc. and Husky Energy Corp. The Canadian Oil Producers Association published a report last month outlining what it wants to see in the adopted election campaign, which is a direct challenge to the NAP government's energy and climate policy.

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CNRL, which supported a broad-based containment policy, warned last month that changes in the company's production boundaries were calculated, which means that it would stop ECHO pipeline in February and March. The pipeline transports heavy crude oil to the blending plant of the company, located in the hard, Alta.

Local politicians in the Lakeland region, north-east of Edmonton, said they were bright to significantly reduce the number of jobs, because oilfield workers, forklifts and support contractors would be out of work.

However, the company issued a statement on Friday confirming that the provincial decision to increase production by 75,000 barrels per day in the next two months made it subject to review. The initial limitations for January reduced production by 325,000 barrels per day.

"With this increase in production, the Canadian Natural Company will be able to maintain production levels to work safely on the ECHO pipeline," said a statement that would affect 2,400 employees.

Production constraints for 28 manufacturers were initially calculated on the basis of the highest six-month average for each company from November 2017 to October 2018. The province later changed the February formula but looked at the manufacturers one month in the same period.

CNRL claimed that these changes make the company take a disproportionate share of the cuts in production.

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Despite recent complaints, the company reaffirmed its support for containment policy, "if the restrictions are implemented in a fair, transparent and reasonable manner".

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