The Annual World's Leading Event For Oil & Gas Industry
Exhibitors login
The 22nd China International Petroleum & Petrochemical
Technology and Equipment Exhibition 

BEIJING,CHINA

March 21-23,2022

LOCATION : HOME > Industry News > Oil companies find a way to cash in by not pumping oil in Canada

Oil companies find a way to cash in by not pumping oil in Canada

Pubdate:2019-02-27 10:31:03 Source: ROBERT TUTTLE AND KEVIN ORLAND Click: 473 times

CALGARY (Bloomberg) — Alberta oil producers have found a way around production limits imposed on them by the provincial government: buy the right to pump barrels from other companies that don’t need them.

The volumes aren’t huge — Husky Energy Inc. is buying rights to produce an additional amount of less than 1,000 bpd, Rob Symonds, COO, said Tuesday in an investor call. It’s not a transparent market, mostly operating “by people phoning people,” Robert Peabody, chief executive officer, said in the call.

“It is a company-to-company market,” Symonds said. “It’s personal contracts.”

Alberta’s government imposed limits on producers starting to alleviate an oil glut caused by a lack of pipelines that sent heavy Canadian crude plunging in October to $50/bbl below benchmark West Texas Intermediate futures. The province announced last month it would ease the curtailments as prices strengthened to an extent that shipping crude by rail became less economic.

Pengrowth Energy Corp., an oil sands producer, has been “actively engaged in this secondary market,” Tom McMillan, spokesman, said in an email.

A buyer of rights to produce will generally pay less than the value of the barrel to ensure a return, McMillan said. “The price you pay per barrel would need to strike a balance so that each barrel you produced creates incremental earnings.”

Alberta’s government allowed such trades to ensure flexibility and also ensure that the province’s output doesn’t fall below the limits imposed, Kevin Birn, IHS Markit’s director of North American crude oil markets, said in a phone interview. The market is set to grow as spring approaches and companies shut equipment for maintenance, he said.

“The province is very clear that they would allow trading,” he said.

An email to Michael McKinnon, a government spokesman, wasn’t immediately returned.

Husky can’t disclose which company it bought barrels from for confidentiality reasons, Spokesman Mel Duvall said in an email. The curtailments apply to 28 producers that pump 10,000 bpd or more.

Part One:Marathon oil signs agreement for divestiture of UK business
The next chapter:Resilient oil sands power Alberta budget through pipeline morass

Copyright © 2020 CIPPE.COM.CN All Rights Reserved by ZHENWEI EXPO(SC: 834316)

Privacy Policy       京ICP备05086866号-1