The head of one of the country's largest oil producers says oil price rivalry in Canada is reaching a "state of emergency" and on Wednesday saw the company's appeal for production cuts that were reflected by a rival.
Oil is a provincial resource and … we provide it for free, "Cenovus Energy CEO Alex Pourbaix said on Calgary's CBC morning, The Eyeopener.
"No one is earning money at this price and this is fast becoming a state of emergency in the economy."
Pourbaix made comments following his company's appeals to the Alberta government to impose temporary production cuts to help deal with oil and pipeline problems, which weigh heavily on many producers.
The value of the Western Canadian Select is about $ 40 a barrel less than the US benchmark. On Wednesday it was $ 15.75 a barrel, compared to $ 56.18 for West Texas Intermediate.
Calvary-based Cenovus blames political barriers to failing to build pipelines, urging the province to take action.
This sentiment resumed on Wednesday by Canadian Natural Resources Executive Vice President Steve Laut, said his company "fully supports cuts" by all Alberta producers.
"It's something that has worked in the past," Laut told CBC News.
Laut noted that then Prime Minister Peter Lougheed cut production in 1980, which Cenovus also put down.
"It just makes sense. It is the simplest, cleanest and most effective way to ensure Albertans will have value for resources and end subsidies to US buyers, "Laut said.
Analysts said that while many Canadian oil companies do not seem to push prices, some US refineries are enjoying an "acne" due to the price difference.
If the whole industry is revived in production, Laut believes that there will probably be a market response almost immediately from the psychological impact of news.
"But I think that, depending on the size of the cut they used, it could be within 30 to 50 days," the strategy for correcting the supply-demand problem, Lauter said.
CNR recently said it has already reduced production to 15,000 barrels a day and could increase this figure to 55,000 this month and in December.
Canadian prices collapsed in September due to oil delays in Alberta.
The Fort McMurray area has increased production this year, but the export pipelines are full and several refineries in the US. which process oil from Alberta have been shut down for maintenance.
Some industry experts expect low fuel prices for heavy Canadian fuels to be maintained in 2020, although more pipeline outlet is expected as soon as Enbridge's line 3 replacement work is completed in about 12 months.
The situation has plagued many Alberta producers, with an estimate linking cost to the industry at $ 100 million a day.
However, some observers noted that not all companies are affected in the same way and it would be difficult to get everyone to agree on cuts in production.
Large integrated companies will not be affected like companies without refineries or other options for their oil production, said Warren Mabee, Energy Policy Specialist at the University of Queen.
In fact, Suncor CEO said this month that his company has full access to the market for all of its production.
"This was a strategic decision we made," said Steve Williams at a financial interview with analysts.
"I have a lot of sympathy for where the market is and I understand the pressure that others are suffering. We invested in this circumstance to make sure there was no effect, but little impact on us.
"So what is happening is that the market works and the higher-cost producers have to pull back because they do not make any margin in their last barrel and we are not in this case."
The provincial government has so far said little about appealing for limited productive cuts.
On Wednesday, she reiterated her position that Prime Minister Rachel Notley is struggling to build new pipelines and urges Ottawa to speed up and help to determine delays in rail transport.
However, spokesman Mike McKinnon said in a message that "we do not rule out options."
In Calgary on Wednesday, the Federal Minister for Natural Resources said he shared Albertan's "disappointment" with billions of dollars lost to the Canadian economy due to oil discounts linked to export pipeline capacities.
However, Amarjeet Sohi said Ottawa is focusing on finding long-term solutions, approving new export pipelines such as the Trans Mountain pipeline extension project that it purchased in August.
Asked about Alberta's request in October to support the federal government to support crude oil shipments, Sohi said that Alberta's request is being examined by his department but has not really seen it.
"My department is dealing with provinces, we are dealing with other federal departments to see what can happen in the short term," Sohi told reporters.
"But, as you know, more than 200,000 barrels of oil are transported through the railways now and that goes up. What we need to do is we need long-term solutions."
With files from the Canadian press