Image: Joey Podlubny/JWN CALGARY — Production cutbacks and deferred drilling programs are emerging as a common theme as Calgary-based oil and gas companies elect to leave barrels in the ground rather than sell at current low prices. In third-quarter results released this week, energy companies large and small say they are avoiding wider-than-usual price discounts compared with U.S. benchmark prices blamed on difficulty in getting barrels to market due to full export pipelines. At least 110,000 bbls/d of potential oil production is being left behind, including cutbacks announced by major oilsands players Canadian Natural Resources Ltd., Cenovus Energy Inc. and MEG Energy Corp. last week, calculates analyst Phil Skolnick, managing director with Eight Capital. “Storage is tight in Canada so it will help clear the storage levels or bring then down, which should then help the diffs (price differentials), and that will be 110,000 bbls/d that won’t be trying to find a home on pipe right now.” He pointed out bitumen must be blended about three-to-one with diluent to flow in a pipeline so the reductions actually translate into a “meaningful” amount of reduced demand on the system. In a note on Monday, RBC analyst Greg Pardy estimated between […]
