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WINNIPEG: Canadian crude producers are churning out extra barrels to end their toughest year in decades on a higher note, after the Alberta government lifted restrictions and increased demand for heavy oil.
Some companies in Canada, the world’s fourth-largest producer, continued to post large losses in the third quarter, compounded by impairment charges related to pandemic travel restrictions that have depressed demand for fuel.
Producers cut 972,000 barrels per day (bpd) in the spring as prices set new lows, reducing production to about 4 million bpd. They have since restored all but 270,000 bpd, according to Canada’s Energy Regulator.
Cenovus Energy Inc is likely to increase production in December, with volume depending on prices, and it expects rivals to restart their reduced capacity, Chief Executive Alex Pourbaix said last week.
“We’re going to see that a significant amount of that will come back in the coming months,” Pourbaix said in an interview.
Suncor Energy Inc said last week that it would increase production at its Fort Hills mine in 2021 and is making improvements to its Firebag site to squeeze more capacity.
“We really want this to be an unfettered market,” Chief Executive Mark Little said Thursday.
Suncor’s production appears to increase 10% in 2021, Little said, from the total expected production for 2020 of 680,000 to 710,000 barrels of oil equivalent per day.
Even though US crude benchmark prices have fallen 42% since the beginning of the year, they have recovered sharply since April.
But at around $ 35 a barrel, the gains are slim. However, the cost of adding incremental barrels can be modest when facilities reach higher production levels, Little said.
Alberta last month lifted production restrictions it imposed in 2019 to ease congested pipelines, now that they are running smoothly and storage levels are low.
Higher production can slow the bleeding of the industry. It’s cutting some 32,000 jobs in production and services, according to government data and announcements this month from Suncor, Cenovus and Husky Energy Inc.
Heavy oil supplies have been curtailed due to US sanctions against Venezuela, which helped Canada sell land to unusual destinations like India.
MEG Energy Corp also plans to produce more oil and increased its 2020 production guidance last week by 3%.
– Reuters
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