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

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

.
Alberta confirmed more than 1,500 COVID-19 cases Sunday

Alberta confirmed 1,584 COVID-19 cases Sunday afternoon. The total active cases went… Continue reading

Hockey Canada logo at an event in Toronto on November 1, 2017. A “non-core member” of Hockey Canada’s National Junior Team staff has tested positive for COVID-19. THE CANADIAN PRESS/Frank Gunn
Hockey Canada staff member tests positive for COVID-19 in Red Deer

A “non-core member” of Hockey Canada’s National Junior Team staff has tested… Continue reading

A man makes his way across an office tower bridge during the COVID-19 pandemic in Toronto, Thursday, Oct. 22, 2020. At least two provinces are reporting new highs for daily COVID-19 infections on Saturday, after the federal government’s latest modelling data showed Canada could see 20,000 cases each day if people keep up their current number of contacts and interactions. THE CANADIAN PRESS/Nathan Denette
COVID-19 cases keep surging in Canada as four provinces report new one-day highs

OTTAWA — Four provinces reported new highs for daily COVID-19 infections on… Continue reading

Minister of International Trade Mary Ng watches pre-recorded footage from an earlier videoconference that she participated in with Canadian Prime Minister Justin Trudeau, UK Prime Minister Boris Johnson and International Trade Secretary Liz Truss, during a news conference on the Canada-United Kingdom Trade Continuity Agreement in Ottawa, on Saturday, Nov. 21, 2020. THE CANADIAN PRESS/Justin Tang
Canada, Britain ink new trade deal, beating Brexit, incorporating expiring EU pact

OTTAWA — Canada and Britain struck a new trade deal on Saturday,… Continue reading

Lynn Van Laar, Christmas Wish Breakfast organizing committee chair, said this year’s event was planned outdoors to minimize the risk of COVID. Photo by Mamta Lulla/Advocate staff
Outdoor Christmas Wish Breakfast helps central Alberta families this holiday season

The coronavirus pandemic isn’t going to stop children from having a merry… Continue reading

Prime Minister Justin Trudeau pauses after responding to a question about the holidays during a news conference outside Rideau Cottage in Ottawa, Friday, Nov. 20, 2020. THE CANADIAN PRESS/Adrian Wyld
Trudeau joins G20 in promising COVID-19 aid to poor nations, rejecting protectionism

OTTAWA — Prime Minister Justin Trudeau joined leaders from the world’s 20… Continue reading

Justice Minister David Lametti responds to a question during Question Period in the House of Commons, in Ottawa, Thursday, Nov. 19, 2020. The federal bill revising the rules on medically assisted death in Canada has raised the ire of the Canadian Psychiatric Association over the proposed law’s explicit rejection of mental illness as grounds for ending a patient’s life. THE CANADIAN PRESS/Adrian Wyld
Exclusion of mental illness in assisted dying-bill slammed by psychiatrists

OTTAWA — The federal bill revising the rules on medically assisted death… Continue reading

The Quebec flag is seen on the podium as Bloc leader Yves-François Blanchet responds to a question during a news conference Wednesday June 3, 2020 in Ottawa. Perennial anxieties around the state of the French language in Quebec have boiled over in the past week, with politicians seizing on a Liberal MP’s initial brush-off of the issue as evidence of indifference to a crisis. THE CANADIAN PRESS/Adrian Wyld
Angst around French language boils over in Quebec, as politicians warn of ‘decline’

MONTREAL — Perennial anxieties around the state of the French language in… Continue reading

Numuch Keitlah, left, and Jake Thomas, centre, participate in a Coastal Nations search and rescue exercise off the coast of Vancouver Island in this undated handout photo. The recently operational Coastal Nations Coast Guard Auxiliary has more than 50 members from five Indigenous territories who are trained in marine search and rescue. They are on call day and night to respond to emergencies along some of B.C.’s most rugged and remote coastal areas. THE CANADIAN PRESS/HO, Jordan Wilson *MANDATORY CREDIT*
Canada’s first Indigenous-led coast guard auxiliary patrols B.C.’s rugged coast

VICTORIA — The winds were gusting at 110 kilometres per hour and… Continue reading

Toronto Raptors guard Fred VanVleet has sponsored the VanVleet Court at the BMO Harris Bank Center in Rockford, Ill. (Photo by THE CANADIAN PRESS)
Fred VanVleet signs four-year, US$85-million deal with Toronto Raptors

TORONTO — Fred VanVleet, one of the most coveted players in free… Continue reading

This undated electron microscope image made available by the U.S. National Institutes of Health in February 2020 shows the Novel Coronavirus SARS-CoV-2, yellow, emerging from the surface of cells, blue/pink, cultured in the lab. Also known as 2019-nCoV, the virus causes COVID-19. THE CANADIAN PRESS/AP, NIAID-RML
‘Hardship is not a new thing:’ Nunavut fights COVID-19 as cases continue to rise

IQALUIT — It has been just over two weeks since Nunavut declared… Continue reading

Pedestrians walk past Pfizer world headquarters in New York on Monday Nov. 9, 2020. Despite recent optimism over reported results from COVID-19 vaccine trials,<br>Two companies, Pfizer and Moderna, have recently announced they're developed COVID-19 vaccines that are 95 per cent effective. THE CANADIAN PRESS/AP, Bebeto Matthews
A long way from lab bench to bedside: Virus experts urge COVID-19 vaccine caution

Despite recent optimism over reported results from COVID-19 vaccine trials, virologists say… Continue reading

Alberta has 1,910 active cases of COVID-19 as of Wednesday. Red Deer is reporting five active cases, with 108 recovered. (File photo)
After COVID-related transplant delays, 16-year-old N.S. girl gets lung transplant

‘This is the difficult time now of seeing Tahlia in ICU hooked up to 15 IVs and sedated’

Most Read