• 4 minutes US-backed coup in Venezuela not so smooth
  • 7 minutes Why Trump will win the wall fight
  • 11 minutes Oil imports by countries
  • 13 minutes Maduro Asks OPEC For Help Against U.S. Sanctions
  • 8 hours Climate Change: A Summer of Storms and Smog Is Coming
  • 7 hours Tension On The Edge: Pakistan Urges U.N. To Intervene Over Kashmir Tension With India
  • 8 hours The Quick Read On MBS's Tour of Pakistan, India And China
  • 9 hours Iran Starts Gulf War Games, To Test Submarine-Launched Missiles
  • 7 hours BMW to add 2,000 more jobs at Dingolfing plant
  • 7 hours Teens For Climate: Swedish Student Leader Wins EU Pledge To Spend Billions On Climate
  • 10 hours Saudi A to Splash $100 Bln on India
  • 1 day Itt looks like natural gas may be at its lowest price ever.
  • 9 hours Venezuela: Nicolas Maduro closes border with Brazil
  • 3 hours Washington Eyes Crackdown On OPEC
  • 1 day Amazon’s Exit Could Scare Off Tech Companies From New York
  • 18 hours NEW FERUKA REFINERY
  • 5 hours Indian Oil Signs First Annual Deal For U.S. OilIndian Oil Signs First Annual Deal For U.S. Oil
The Ultimate Tool To Prop Up Oil Prices

The Ultimate Tool To Prop Up Oil Prices

Investor interest in the oil…

Canada’s Biggest Producer Cuts Drilling As Heavy Oil Price Tumbles

Roughnecks at work

Canada Natural Resources, the largest producer, is allocating capital to lighter oil drilling and is curtailing heavy oil production as the price of Canadian heavy oil tumbled to a nearly five-year-low relative to the U.S. benchmark price.

Due to the transportation bottlenecks, the discount at which Western Canadian Select (WCS)—the benchmark price of oil from Canada’s oil sands delivered at Hardisty, Alberta—trades relative to WTI has been more than US$20 this year.

On Thursday, that discount blew out to US$30.80 a barrel—the largest WCS-WTI differential since December 2013, according to data compiled by Bloomberg.

Canada Natural Resources said on Thursday in its Q2 results release that its North America crude oil and natural gas liquids (NGLs) production in the second quarter dropped by 3 percent from the first quarter of 2018, primarily as a result of production curtailments and shut-in volumes of around 10,350 bpd as well as reduced drilling activity and delayed completion and ramp up of certain primary heavy crude oil wells drilled in Q1 and Q2.

“Due to current market conditions the Company has exercised its capital flexibility by shifting capital from primary heavy crude oil to light crude oil in 2018, resulting in an additional 7 net light crude oil wells targeted to be drilled in the second half of the year. Primary heavy crude oil drilling was reduced by 24 net primary heavy crude oil wells in Q2/18, with an additional 35 primary heavy crude oil well reduction targeted for the second half of the year,” Canada Natural Resources said yesterday.

Related: War-Torn Yemen Restarts Oil Exports

Canada is producing record amounts of heavy oil from the oil sands and its economic recovery is driven by the oil industry, but drillers are finding it increasingly difficult to get this oil to market because pipelines are running at capacity and new ones are finding opposition from various groups.

Until recently, production growth continued despite the pipeline capacity constraint that pressured Canadian crude into a major discount to WTI. Now, the Petroleum Services Association of Canada has cut its well-drilling forecast for this year to a number that will be lower than the 2017 figure. The body expects 6,900 new wells to be drilled in 2018, compared with 7,400 wells predicted in the April forecast. The 2018 figure is also 200 wells lower than that for 2017 as the pipeline shortage begins to bite.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

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