The recovery in oil prices helped Alberta reduce its budget deficit by US$2.11 billion (C$2.8 billion) in financial 2017/18, to US$6.04 billion (C$8 billion), the province's Finance Minister said in the release of Alberta's financial results for the fiscal year.
"I can say we did very well. We have kept our spending at reasonable levels," Joe Ceci said, as quoted by the Calgary Sun. Although the figure is still among the highest deficits in the history of Alberta, it is significantly lower than the US$7.63 billion (C$10.1 billion) the government projected last year when it passed the budget, and also lower than the US$8.16-billion (C$10.8-billion) budget shortfall booked for the prior fiscal year.
The budget income from the oil industry rose by US$1.44 billion (C$1.9 billion) in the period, to nearly US$3.78 billion (C$5 billion), Ceci said. This was also about a billion dollars more than initial budget estimates for this income.
And yet the Alberta oil industry is far from carefree. Despite the improvement in prices over the last year, producers are increasingly pressured by a lack of pipeline capacity that earlier this month brought the discount of Western Canadian Select to West Texas Intermediate to US$30 a barrel.
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Now the discount has shrunk somewhat thanks to a production outage at Suncor's Syncrude production and upgrading complex that cut supply by around 300,000 bpd, also easing pressure on pipelines. Producers will be able to get a breather that could last as long as a month, as Syncor said repairs following the power outage that suspended operations at Syncrude could last until the end of July.
Today, the discount of WCS to WTI was US$27.41 a barrel.
In further good news for troubled Alberta oil producers, the Minnesota Public Utilities Commission yesterday approved the route for Enbridge's Line 3 replacement project and issued the company a certificate of need. At the moment, Line 3, which carries oil from Alberta to Wisconsin, runs at half its capacity because of corrosion and cracking. After the replacement it will be able to ship a lot more crude.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More