Deep discount on Canadian crude dings Cenovus
Alberta United Conservative Party leader Jason Kenney is pushing the right buttons with his promise to fight Ottawa over its energy policy, according to one of the oil patch’s most outspoken executives.
“Any time a politician says they’re going to get out there and fight for this industry, they certainly have my support,” Cenovus Energy Inc. Chief Executive Officer Alex Pourbaix told BNN Bloomberg in an interview on Wednesday.
“I think that what we’ve all learned is that we have a lot of opponents out there who are not constrained by the truth. Our industry, the mid-stream industry, people employed by this industry, Albertans, Canadians, need to get out there and defend this industry.”
Kenney – Alberta’s current Leader of the Opposition and primary threat to Premier Rachel Notley in the provincial election expected this year – vowed on Monday to be more “assertive” towards Prime Minister Justin Trudeau over his approach to Canada’s energy sector.
“People feel like they’ve worked hard, played by the rules and been very good neighbours in the federation -- and in response, in return, we seem to be getting blockaded and pinned down everywhere,” Kenney told Bloomberg News in an interview in Calgary. “How do we move from a defensive to an assertive posture in the fight for our resources and our way of life?”
Pourbaix – who was a leading voice calling for Alberta’s production curtailments, which were implemented in December – said the cuts have already helped correct the oil patch’s course in terms of Canadian crude’s differential to the North American benchmark West Texas Intermediate.
Western Canadian Select was trading at US$43.53 as of 2:12 p.m. ET on Monday, US$10.34 lower than WTI.
“I think the good news is, with curtailment, with volumes ramping by rail and hopefully with Enbridge’s Line 3 coming in towards the latter half of this year, I think we’re through those very wide differentials. I don’t expect to see those back,” he said.
However, he added that he doesn’t expect the current discount on Canadian oil to persist.
“We’re all enjoying these US$10 differentials but I expect that’s a relatively short-term phenomenon and I expect the government will manage curtailment volumes to ensure that the incentive is there for companies like mine to get oil-by-rail moving.”