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Canadian oil is struggling. And I mean really, really having a tough time. Alberta's benchmark, Western Canadian Select, is now cheaper than a pint of beer. Sitting at $4.71 at the time of writing, WCS is facing a nightmare scenario.
Fortunately for Alberta, Canada's Prime Minister Justin Trudeau said this month that the government was scrambling to secure an aid package for the country's oil sector. And though the help has been slow to come, it seems the administration is now closer than ever to providing some relief for the ailing industry.
“We recognize that the most important thing from the very beginning was to get help out to Canadians right across the country, regardless of the sectors they’re in, regardless of their situation or their location,” the prime minister said.
And some relief has come. Not only have OPEC and a slew of other oil producers across the globe agreed upon a massive 9.7 million barrel per day cut in oil production, but the Canadian government has also been making some attempts to prop up the industry.
In Saskatchewan, mineral rights have been extended until 2021, allowing more time for producers to plan since holding onto those titles typically means drilling a well - which in this environment, is currently out of the question.
Warren Waldegger, the president and CEO of Fire Sky Energy, noted that “An extra year on some of those leases...hopefully will lead to future drilling activity."
Alberta too has seen some relief, with a $100 million loan to the Orphan Well Association to begin the reclamation and abandonment of up to 1000 more wells. Additionally, the government noted that it will enact important reforms under Bill 12 of the Oil & Gas Conservation Act, allowing the Orphan Well Association to sell oil from orphan wells to associated pipelines.
But whether or not the government is doing enough to support the industry through this crisis remains unclear. The mega-relief package that Finance Minister Bill Morneau touted was only "hours away" a few weeks ago still hasn't come.
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com,