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New Mexico Struggles To Balance Oil Output Boom with Climate Goals

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Canadian Natural Resources Calls Out Against Production Cuts

Canadian Natural Resources, one of Alberta’s biggest oil producers, has made a 180-degree turn on the production cuts imposed by Premier Rachel Notley last December to reverse a severe decline in the local crude oil benchmark.

CBC News reports, citing a Canadian natural letter to suppliers, that a revision in the methodology of how the production cuts are applied will saddle the company with an "unreasonable and discriminatory" portion of the cuts.

The letter, seen by CBC News, also said, "The revised methodology is flawed and clearly discriminatory to Canadian Natural and as a result directly impacts the heavy oil regions of Alberta." The company, however, declined to comment on it.

CBC News also quoted an Albertan government spokesman as saying, "We disagree with their characterization and it's disappointing to see them threatening suppliers with job losses when they're being treated the same as other producers. CNRL is being treated fairly and equitably under this policy, which they support, and the company will need to be accountable for their own regional business decisions.”

Indeed, initially Canadian Natural was a staunch supporter of the cuts, like peer Cenovus.

“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 at the time.

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Not all were on board with the idea, however. “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,” was the statement of Suncor, which has both upstream and downstream operations in Alberta, which makes it less likelyto be affected by low crude prices.

The cuts instituted by the provincial government went into effect at the start of this year, at a daily rate of 325,000 bpd, with the goal of reducing excessive supply. Once the overhang was cleared, the plan was to reduce the rate of cutting to just 95,000 bpd, to remain in effect until the end of the year.

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By Irina Slav for Oilprice.com

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