Western Canada’s oil companies must settle for a discounted price for their products thanks to production gains that have not been matched by export pipeline capacity gains. Alberta oil producers are dealing with a brutal oil differential that’s costing Canada billions of dollars in lost revenue. Premier Rachel Notley called it a “very serious problem” Thursday when the price for Western Canadian Select (WCS) heavy crude reached a record low, at one point dropping below US$14. The price discount for WCS has been sitting at around US$40 a barrel. “There’s a lack of consensus within the industry about the best way forward, meanwhile we have a suite of options at our disposal,” Notley told reporters. “We don’t want it racing out of the ground at $10 a barrel.” Estimates to how much the differential is costing the economy vary — the Canadian Association of Petroleum Producers pegged it at at least C$13 billion in the first 10 months of 2018 and around C$50 million per day in October. What are the options to reduce the differential? Build a pipeline The deteriorating Enbridge Energy Line 3 carries crude oil from Hardisty, Alta., through the U.S. to Enbridge’s terminal in Wisconsin. […]
