• 4 minutes "Saudi Armada heading to U.S.", "Dumping" is a WTO VIOLATION.
  • 7 minutes Trump will be holding back funds that were going to W.H.O. Good move
  • 11 minutes Washington doctor removed from his post, over covid
  • 15 minutes Which producers will shut in first?
  • 3 hours Why Trump Is Right to Re-Open the Economy
  • 3 hours Charts of COVID-19 Fatality Rate by Age and Sex
  • 2 hours A small trial finds that hydroxychloroquine is not effective for treating coronavirus
  • 6 hours US Shale Resilience: Oil Industry Experts Say Shale Will Rise Again
  • 4 hours 80's GOM Oil Fam: Mid-80's Oil Glut Part Deux?
  • 10 hours Wouldn't fall in demand balance it out?
  • 6 hours Its going to be an oil bloodbath
  • 20 hours Death Match: Climate Change vs. Coronavirus
  • 18 hours Free market or Freeloading off the work of others?
  • 23 hours Russia's Rosneft Oil is screwed if they have to shut down production as a result of glut.
  • 3 hours CCP holding back virus data . . . . . . Spanish Flu 1918 MUTATED, Came in 3 waves, Lasted 14 months and killed upward 5% World population
  • 18 hours Trump will meet with executives in the energy industry to discuss the impact of COVID-19
Alt Text

Is Trump Right About Falling U.S. Oil Output?

U.S. President Trump claimed this…

Alt Text

Emerging Oil Hotspots Hammered By Coronavirus Crisis

The ongoing price crash triggered…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Alberta To Fight “Air Barrels” As Prices Continue To Plunge

Albertan oil producers need to become warier of overbooking already filled to capacity oil pipelines creating what’s commonly called “air barrels” as these contribute to the huge discount Canadian crude is trading at to WTI and other benchmarks. This is the message from Alberta’s Premier Rachel Notley, as reported by the Calgary Herald.

The oil industry in Alberta has been scrambling to find a way out of the discount that has eaten deeply into producers’ bottom lines. Since new pipelines are far from likely to come into operation in the foreseeable future, other options are being considered, including, most recently, deliberately cutting production, OPEC-style, to prop up prices.

Producers, however, are divided on this. While Cenovus is all for government-initiated cuts in production, Suncor, an equally large producer, is against it.

“We’re probably producing about 200,000 or 300,000 barrels per day of oil in excess of our ability to get that oil out of the province, either by pipelines or by rail,” Cenovus’ CEO Alex Pourbaix told Canadian media earlier this month.

On the other hand, “Our position is that government intervention in the market would send the wrong signals to the investment community regarding doing business in Alberta and Canada. And we really do need to take a long-term view and allow the market to operate as it should,” a Suncor spokeswoman said.

The provincial government, meanwhile, is considering closer scrutiny of pipeline and railway shipments in order to see which producers are guilty of creating “air barrels”. It could then hold them accountable. The problems with this approach are that it cannot be deployed immediately and that it will have a limited scope, as the provincial government could only give itself the powers to track shipments within Alberta itself.

While the industry and the government are trying to come up with some sort of solution to the price problem, Western Canadian Select was trading at US$15.20 a barrel at the time of writing, compared with US$56.96 a barrel for West Texas Intermediate.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage






Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News