Canada’s Top Oil Province on Friday lowered its 2019 economic growth forecast as oil prices continue to flounder according to a government statement cited by Reuters.
Crude oil production in Alberta, which vacillates between serving as its lifeblood and bane of its existence, accounts for more than 80 percent of Canada’s total crude oil production, and has been hit the hardest of all Canada’s provinces by the widening spread between the Western Canadian Select and WTI benchmarks, which reached a crescendo last month around $50—a spread nearly inconceivable.
Under pressure from falling WCS prices that are now around $15 per barrel and zero spare takeaway capacity to ship oil to its largest purchaser, the United States, Alberta revised downward its economic growth forecasts for 2019 from 2.5 percent to 2.0 percent.
“The oil price differential is a crisis for Alberta and a crisis for Canada,” said Finance Minister Joe Ceci at a news conference Friday, according to the Edmonton Sun.
Faced with no end in sight to the constrained pipeline capacity, a desperate Alberta announced yesterday that it plans to purchase oil trains to move the oil that is now stuck in province, although it is expected to shore up only $4 per barrel of that $50 gap between WTI and WCS.
“We have already engaged a third-party to negotiate and work is well under way. We anticipate conclusion of the deal within weeks,” Premier Rachel Notley said at a recent meeting with business executives.
Despite its best laid plans, Alberta does not expect the first additional rail cars—and only enough to move an additional 15,000 bpd at that—to be ready to move until the end of next year.
Canada is expected to average 4.59 million bpd of crude oil production this year, despite its takeaway capacity constraints.