Gulf Coast refiners may not be able afford to receive Alberta

Alberta must exit market to get oil moving again

Alberta crude oil production curtailment has been working so well of late in terms of generating stronger prices for its benchmark heavy crude oil and lowering crude oil inventories, that Premier Rachel Notley recently announced an easing of the curtailment mandate.

canada goose online uk As is often the case when the government tries to level the playing field, things often tilt in the other direction when least expected. The most recent data seem to be telling a different story as the province crude oil inventories are now rising at the same time that rail shipments have been falling. So how well is the curtailment really working? canada goose online uk

Although crude oil inventories have declined from critically cheap canada goose uk high (and price depressing) levels, the higher prices for Canada Goose Coats On Sale Alberta crude have also squeezed the economics of moving crude by rail, at the same time that pipelines remain completely full.

canada goose outlet store calgary The end result is that slowing rail shipments may now be contributing to the unwanted outcome of rising inventories, the very opposite of what the province intended. The production curtailment and the narrowing price gap it artificially created between Western Canadian Select and West Texas Intermediate crudes does not allow for economical crude by rail shipments, https://www.buchholz-net.de and the data appear to be proving this out. canada goose outlet store calgary

canada goose expedition parka uk Rail shipment Canada Goose Parka of crude oil, and the pricing economics to support it, remains one of the main ways by which producers must ship crude out of canada goose clearance Alberta due to limited pipeline capacity. Which is why Alberta is in the process of trying to procure more rail cars for the province, though at a cost of at least $1 billion and a timeline of being in use by late 2019, they won do much good in the current predicament. canada goose expedition parka uk

When the price of Alberta crude was at its lowest in November and December, and the price difference between WCS and WTI at its highest, crude by rail shipments peaked. Rail shipping threw a valuable lifeline to producers who needed to reduce excess supply, one of the key goals of curtailment.

canada goose parka outlet uk When curtailment manipulated the price of WCS crude, it quickly undercut the economics of this vital transportation method. Gulf Coast refiners may not be able afford to receive Alberta crude by rail, and at a time when Alberta heavy oil supplies are acutely desired thanks to embargoes being placed by the United States on the importation of heavy Venezuelan crude oil. canada goose parka outlet canada goose outlet uk

canada goose jacket outlet toronto It simple rail economics. When WCS is 15 to Canada Goose Jackets 20 dollars cheaper than WTI, producers and refiners can afford to ship barrels by rail. canada goose jacket outlet toronto

A few days later Suncor made a similar statement, hoping that curtailment would end sooner than expected because the market distortions it introduced made it too costly to ship by rail. As CEO Steve canada goose coats Williams explained, rail economics are seriously damaged, and a lot of the rail movements are stopping or canada goose black friday sale have stopped.

canada goose outlet hong kong Alberta producers have been very good at increasing crude oil supplies so rapidly, against a buy canada goose jacket backdrop of limited export pipeline capacity, that it created an unexpected low pricing and bloated inventory outcome of its own making. canada goose outlet hong kong

However, market forces prior to the Alberta government intervention, were starting to canadian goose jacket fix that unexpected outcome with low prices forcing voluntary (not mandated) production curtailments by some oil producers and incentivizing record rail shipments.

By the Alberta government trying to fix the problem canada goose uk black friday more quickly, it has unwittingly undermined one budding transportation alternative, crude by rail, as well as creating a host of other issues affecting jobs and future investment in the province.

canada goose black friday fake We need a process to exit this period of market intervention and get canada goose uk outlet Alberta crude oil moving again to market as efficiently canada goose factory sale and as cost effectively as possible canada goose black friday fake.