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Page added on December 29, 2018

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Oil Sands Rebound in 2019

Production

The Canadian oil industry could be in for another turbulent year in 2019, depending on how some pivotal events pan out.

Government-mandated production cuts and the potential startup of a key crude pipeline are among key developments to watch for next year. Here’s a look at each one:

Production Curtailments

While the announcement of production curtailments by Premier Rachel Notley has succeeded in lifting Canadian crude prices from record lows even before their implementation starts next month, the province’s ability to wind down that policy without crashing the market will be crucial.

The province has said it only expects the full 325,000-barrel-a-day output cut to be in place for the first three months of the year, while the amount of oil in storage is drawn down to historical levels. The government will then work to match production with transportation and storage policy, reviewing the levels every month.

Further reductions in the curtailment should come in the fall and winter as additional rail capacity comes on line, and the policy should be canceled entirely by the end of the year if Enbridge Inc.’s expanded Line 3 comes into service.

Rail Ramps Up

The province’s ability to extricate itself from the curtailment system depends partly on more rail-shipping capacity becoming available in the second half of the year.

Producers have struck contracts to ship more crude by rail next year, with Cenovus Energy Inc. announcing three-year agreements that cover about 100,000 barrels a day of capacity. Alberta also is buying rail cars that will help ship an additional 120,000 barrels a day.

Whether manufacturers and rail companies can supply all that equipment — and the people to operate it — in a timely fashion will be key to the success of those plans. The province’s plan alone will add 80 locomotives and more than 7,000 cars.

And with record amounts of crude already moving on Canada’s rails, the system’s ability to take on more shipments will be crucial. That’s far from a given as even without the increased oil shipments, Canada’s rails faced logjams earlier this year that caused stacks of wheat and canola to pile up on farms across the prairie provinces.

More Pipeline Space

The fourth quarter is when Canada’s oil patch finally expects to get a taste of relief from its perpetual pipeline woes. That’s when Enbridge’s expansion of its Line 3, which is designed to ship an additional 370,000 barrels a day from Alberta’s oil sands to a hub in Superior, Wisconsin, is expected to come into service. The timeline for other pipelines is both further out and less certain.

But even while Line 3 has all of its major regulatory approvals in hand and construction has been completed in Wisconsin and is more than halfway done in Canada, hiccups are still possible.

“They still need local permits here and there in the U.S.,” said Randy Ollenberger, an analyst at Bank of Montreal. “That could add some delays.”

Provincial Election

Alberta is scheduled to have its next provincial election on or before May 31. Notley’s center-left New Democratic Party, which broke more than four decades of conservative rule when it swept to power in 2015, will face a tough challenge holding onto control next year.

While she has been a staunch advocate for the oil industry — lobbying for pipelines, buying rail cars and plowing money into adding upgrading, refining and petrochemical capacity — she has still been criticized by United Conservative Party Leader Jason Kenney for not doing more and for implementing environmental policies like a carbon tax.

Still, oil prices are largely out of the premier’s hands, and it remains to be seen whether a change in who’s occupying the office can actually improve the industry’s fortunes.

rigzone.com



25 Comments on "Oil Sands Rebound in 2019"

  1. twocats on Sat, 29th Dec 2018 8:39 am 

    the editors of these publications are complete hacks – unable to write themselves, they spend their days obfuscating the work of journalists who can.

    the headline of the article (also in the original) is so misleading its almost a joke. Just take the opposite of the article and there’s your headline.

    “Oil Sands going 100% solar for production in 2019”

    “Oil Sands to donate profits to save caribou”

    Seriously, this Onion level crazy.

  2. Cloggie on Sat, 29th Dec 2018 8:41 am 

    How much surface area is required for a renewable energy transition, carried out solely with pv-solar?

    Surprisingly little:

    https://deepresource.wordpress.com/2018/12/29/the-scale-of-the-global-energy-transition/

    The calculation was done by a nuclear energy professor, who admits he would prefer the “Sahara solution”.

    Fortunately we have Canada standing by to enable such a transition.

  3. Solar Skeptic on Sat, 29th Dec 2018 11:06 am 

    Cloggie: what about all the line losses from running that power from where the sun shines to where the power needs are? Just building and maintaining those power lines is a huge expense.

  4. gwb on Sat, 29th Dec 2018 11:30 am 

    Meanwhile, in Venezuela, PDVSA is going to pot:

    https://www.msn.com/en-us/news/world/special-report-oil-output-goes-awol-in-venezuela-as-soldiers-run-pdvsa/ar-BBRrPCS?li=BBnbfcL

  5. Cloggie on Sat, 29th Dec 2018 11:32 am 

    Cloggie: what about all the line losses from running that power from where the sun shines to where the power needs are? Just building and maintaining those power lines is a huge expense.

    Storage is the key, not power-lines. And nobody is seriously suggesting to build a single power station of the size of Bulgaria in the Sahara.

    You can transport high-voltage electricity economically over thousands of kilometers:

    https://en.wikipedia.org/wiki/Ultra-high-voltage_electricity_transmission_in_China

    But the key to a functioning renewable energy system is storage. Many candidates exist: hydrogen, metal powder, ammonia, methanol, seasonal storage of heat, CAES, pumped hydro storage and the list goes on.

  6. kiji on Sat, 29th Dec 2018 12:21 pm 

    i am from alberta, get some f ing balls declare that ALL taxes will be collected by the provincial govt. then the minimum amount will be forwarded to ottawa. we pay the most to equalization payments while the frogs lie and cheat and suck up the most. ontario owes the most money in north america on a per capita basis so nothing is coming out of them. then tell shithead the 2nd the doo. cut equal payments or we leave and you owe us big bucks for supporting those useless frogs. and you can add it to fed debt. then we tell tribes you make deal with us to west coast against bc or you die on the vine with bc. lets cut this welfare shit system out if a province cant make it then let it suffer till it can. you get nothing with people on welfare long term. i am for short term hand out as everyone goes thru hard times but long term like frog province is stupid they just find more ways to cheat. and if the frogs try that FLQ shit again then lock a few thousand in work camps for the rest of there lives for treason

  7. Gaia on Sat, 29th Dec 2018 12:50 pm 

    Rigzone is propaganda.

  8. Davy on Sat, 29th Dec 2018 12:55 pm 

    The Canadian oily industry is American owned and controlled.

  9. kiji on Sat, 29th Dec 2018 1:49 pm 

    coinbase does not have the coins to transact simple low value transactions. RUN FAST. first out gets there money rest loose.https://www.youtube.com/watch?time_continue=119&v=QsBjg-NuF7k

  10. JuanP on Sat, 29th Dec 2018 2:17 pm 

    I said this

    The Canadian oily industry is American owned and controlled.

  11. Davy Identity Theft on Sat, 29th Dec 2018 2:27 pm 

    JuanP on Sat, 29th Dec 2018 2:17 pm

  12. print baby print on Sun, 30th Dec 2018 5:36 am 

    Oil sand was extracted even when there was no financial reason to be extracted. So yes print baby print is the culprit. Which tell us that for a long time we need every barrel we can laid our hands on

  13. Plantagenet on Sun, 30th Dec 2018 5:46 am 

    OMG I haven’t been in this forum for awhile but I’m suprised Cloggie is still here his posts are all b.s nobody in there right mind reads them . That’s what happens when you retire and are bored at home by yourself . Cheers

  14. Davy Identity Theft on Sun, 30th Dec 2018 10:54 am 

    Plantagenet on Sun, 30th Dec 2018 5:46 am

  15. Davy on Sun, 30th Dec 2018 11:07 am 

    Lying JuanP that was you idiot or maybe plant. This is the nature of your insanity.

  16. Dredd on Sun, 30th Dec 2018 11:32 am 

    “Oil Sands Rebound in 2019”

    Oh, every thing’s ducky? (The Shapeshifters of Bullshitistan – 17)

    “Sans Oil-Qaeda rebound …”

    That’s more like it!

  17. Anonymouse on Sun, 30th Dec 2018 3:20 pm 

    You dont retire from being a retard, or a delusional dumbass either, right exceptionalturd?

  18. Flush the turd on Sun, 30th Dec 2018 4:14 pm 

    Anonymouse on Sun, 30th Dec 2018 3:20 pm

  19. Davy Sock Puppet on Sun, 30th Dec 2018 5:33 pm 

    Flush the turd

  20. JuanP suck puppet on Sun, 30th Dec 2018 5:48 pm 

    Flush Juan turd

  21. Deport JuanP on Sun, 30th Dec 2018 5:49 pm 

    JuanP is an illegal alien. Deport the bastard

  22. JuanP suck puppet on Sun, 30th Dec 2018 5:50 pm 

    Deport JuanP on Sun, 30th Dec 2018 5:49 pm

  23. Davy Sock Puppet on Sun, 30th Dec 2018 6:40 pm 

    JuanP suck puppet on Sun, 30th Dec 2018 5:48 pm

  24. Davy Sock Puppet on Sun, 30th Dec 2018 6:40 pm 

    Deport JuanP on Sun, 30th Dec 2018 5:49 pm

  25. Davy Sock Puppet on Sun, 30th Dec 2018 6:41 pm 

    JuanP suck puppet on Sun, 30th Dec 2018 5:50 pm

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