Cenovus boosts oil output plans on Alberta move to curtailment relief for rail

CALGARY — Cenovus Energy Inc. says it will add as much as 70,000 barrels per day of oilsands output following the Alberta government’s decision to ease production curtailments for producers that add crude-by-rail capacity.

The company can quickly add 10,000 to 20,000 bpd of raw bitumen output from its Christina Lake and Foster Creek northeastern Alberta thermal oilsands projects, said CEO Alex Pourbaix during a conference call Thursday morning after the decision was announced.

Meanwhile, it plans to begin startup procedures on its $675-million, 50,000-barrel-per-day Christina Lake phase G oilsands expansion project with production expected within six to 12 months.

Construction of the expansion was completed earlier this year but commissioning was put on hold until market access questions were answered.

“We think it’s a great way to incent further rail takeway capacity out of Alberta and we applaud the government for moving forward with this initiative,” said Pourbaix.

He added the move doesn’t remove the necessity of building more oil export pipelines.

Under the previous NDP government, Alberta put a cap on the amount of oil the industry can produce starting in January as a way to narrow local price discounts that grew as oil production exceeded the ability of pipelines to get the crude to market.

The measure was continued by the United Conservative government when it was elected last spring. The total industry quota is to increase to 3.81 million barrels per day in December, up 250,000 bpd from the original limit of 3.56 million barrels a day.

“Overall, we believe this program will be an important addition to the efforts to increase market access,” said Energy Minister Sonya Savage on Thursday.

“Looking ahead, maximizing the amount of crude shipped by rail is an important factor in moving forward towards an orderly exit out of curtailment altogether, which, under the enhanced policy, is scheduled to be concluded by the end of December 2020.”

Alberta currently ships around 310,000 barrels per day on rail, she said, but the rail system has the capacity for daily shipments of 500,000 to 600,000 barrels.

The new program is to be available as of Dec. 1 and operators will need to apply on a monthly basis and verify their rail shipments.

The province is still working on a plan to divest railcar contracts signed by the NDP government, Savage said.

Suncor Energy Inc. CEO Mark Little also welcomed the Alberta initiative, which had been requested by several oilsands producers earlier this year.

“I think this is a very positive development because the whole purpose of curtailment was to reduce production to align with the takeaway capacity,” he said during a conference call Thursday morning.

“But I think we all know that ever since that was implemented, the takeaway capacity in Western Canada has declined, which is the exact opposite of what you want to happen when you have excess production.”

Between 200,000 and 300,000 bpd of additional rail could be brought to market to accompany about 200,000 bpd of incremental pipeline capacity additions, Little said.

He added Suncor will work to fill its currently contracted capacity of 30,000 bpd on rail “in the next month or two.”

In third-quarter results released Wednesday afternoon, Suncor cut its production guidance for 2019 to a mid-point of 785,000 barrels of oil equivalent per day, down from 800,000 boe/d, in part because of curtailments that have been in place for longer than anticipated.

Last week, Husky Energy Inc. CEO Rob Peabody said his company was directing most of its spending to regions other than in Alberta because of the curtailments.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Carl’s Jr. in Red Deer area closed

Co-owner of Carl’s Jr. in Gasoline Alley was caught using his bare hands to handle sauce in 2017

Cattle Show set to return to Stettler Jan. 31st and Feb. 1st

“Stettler, historically, has been a very strong cattle community. It was a real hub for the cattle industry.”

Quebec MP Gerard Deltell says non to Tory leadership

OTTAWA — Quebec MP Gerard Deltell says he’s decided not to enter… Continue reading

Studies question assumptions on industrial damage to Wood Buffalo park

New research suggests Canada’s largest national park is not drying out from… Continue reading

WATCH: Canadian kid shovelling snow video goes viral

Rory might just be Canada’s most popular toddler right now, thanks to… Continue reading

Your community calendar

Jan. 22 Downtown House Senior Center (5414 43 St.) in Red Deer… Continue reading

Hikers rescued after frigid night on Eagle Mountain in Coquitlam, B.C.

COQUITLAM, B.C. — Five hikers stranded on Eagle Mountain in Coquitlam, B.C.,… Continue reading

SpaceX launches, destroys rocket in astronaut escape test

CAPE CANAVERAL, Fla. — SpaceX completed the last big test of its… Continue reading

Canada’s Jeff Smith wins way back to PDC pro darts tour via qualifying school

WIGAN, England — Canadian Jeff Smith has won his way back to… Continue reading

Skate Canada to wait on final decision for world championship team

MISSISSAUGA, Ont. — Ice dancers Piper Gilles and Paul Poirier headline the… Continue reading

Canadian golfer Lee finishes in fifth place at Singapore Open, Kuchar wins

SINGAPORE — Canadian golfer Richard T. Lee shot 1-over 71 on Sunday… Continue reading

Armed Forces being mobilized to help Eastern Newfoundland dig out

ST. JOHN’S, N.L. — The federal government is mobilizing the Armed Forces… Continue reading

Couple together for nearly 65 years die on the same day

ARNOLD, Mo. — A couple who had been together for nearly 65… Continue reading

Most Read