Oilsands producer CNRL cuts $1 billion from budget due to low oil price
Oilsands producer Canadian Natural Resources Ltd. is setting its 2019 capital budget at $1-billion less than its “normalized” range but says it will ramp up spending if heavily discounted oil prices in Western Canada rebound.
The Calgary-based company says it is targeting a 2019 base capital program of $3.7 billion, about 20 per cent below its preferred range of $4.7 billion to $5.0 billion.
The program includes about $3.1 billion needed to maintain production and $600 million to be spent on long-term growth projects.
Canadian Natural says a curtailment program announced by the Alberta government last weekend designed to remove 325,000 barrels per day of oil from the province’s over-taxed pipelines has already resulted in stronger forward crude prices in January.
It says it will monitor those prices and the progress of the stalled Keystone XL and Trans Mountain expansion export pipelines with the option to increase its spending by about $700 million next year if signals warrant.
The proposed Keystone XL pipeline, which would bring crude oil from Hardisty, Alta., to markets in the U.S. Gulf Coast and Midwest, is years behind schedule after it was denied by the Obama administration. It received new life in spring 2017 when Donald Trump gave it a presidential permit.
The Trans Mountain pipeline expansion, which would triple capacity to move oil to the west coast, was approved two years ago, but is now in legal limbo as Ottawa revisits the impacts on First Nations and B.C.’s marine environment.
CNRL says production in 2019 is targeted to be between 1.03 million and 1.12 million barrels of oil equivalent per day, with a product mix of about 76 per cent oil and natural gas liquids and 24 per cent dry natural gas.
Each type of oil around the world has its own price and in recent months, the price of Alberta crude has tanked. New-York-traded West Texas Intermediate (WTI) is the benchmark price for light crude oil in North America. Western Canadian Select (WCS) is the reference price for heavy crude oil from the oilsands.
The discount between Alberta’s WCS and the benchmark WTI was about US$25 per barrel on Tuesday. Alberta Premier Rachel Notley says a lack of pipeline capacity is a big part of the problem, and the price differential is costing Canada $80 million per day.
Notley said Prime Minister Justin Trudeau’s government must do its part by rolling back proposed legislation that she says will make it much harder for energy megaprojects to be approved.
— With files from Karen Bartko, Global News