The bleeding continues as WCS sinks below US$13 a barrel
Despite little change in the heavy oil discount, Western Canadian Select fell below US$13 a barrel on Tuesday, dragged lower by a continued decline in the price of West Texas Intermediate (WTI).
Cenovus Energy CEO Alex Pourbaix says Alberta is facing a "wholesale economic catastrophe," which warrants drastic intervention. Pourbaix would like to see the province use its legislated authority to order producers to reduce output. The law was used in the early 1980s when former PM Trudeau enacted the National Energy Program, forcing Alberta producers to sell their oil at a deep discount.
Peters & Co estimates the province's losses at about $50 billion, with respect to total economic activity, and $5 billion in terms of provincial government revenues. The investment firm estimates that about 200,000 bbl/day of production will be taken offline during the last two months of the year due to the depressed prices.
GMP Capital CEO Harris Fricker calls the situation "depressing," and estimates the current lack of pipeline infrastructure is costing the country $16 billion annually. GMP's former chairman says capital flight out of Canada’s oil patch is the worst he's seen in 25 years, blaming the current fiasco on federal and provincial regulatory burdens. The investment bank has halved their staff in energy and mining, which was traditionally their core business, and instead have begun shifting their focus to cannabis and blockchain.
Peyto Exploration CEO Darren Gee blames the capital exodus on the politicization of Canada's energy sector. Gee says environmental and regulatory concerns have added an "entire layer of risk" that investors are unable to assess. The CEO also says the country should have expected a fight in its bid to ramp up production, and Canadians should be ready to put their "elbows up and fight back"
Total Energy Services CEO Daniel Halyk says he's offended to be selling Canadian resources "for pennies on the dollar." Advantage Oil & Gas CEO Andy Mah says he would like politicians and the general public to understand how important the energy sector is to the Canadian economy.
California-based Capital Group is telling its investors to avoid the Canadian energy sector, unless more is done to improve market access. The financial services firm has asked PM Trudeau to be "more proactive in securing market access which will assure the competitiveness of Canadian energy companies." Capital Group manages US$1.7 trillion in global assets, including more than US$30 billion in Canadian securities. The firm is the the largest shareholder of Suncor Energy, Enbridge, Canadian Natural Resources and Keyera.