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Another pipeline delay no cause for continuing curtailment

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15.03.2019

The year-long delay of the Enbridge pipeline reconstruction will understandably cause frustration for Alberta, a province that was already in need of more pipeline capacity. But the provincial government should avoid the temptation to build on its curtailment policy and introduce more stringent production quotas.

Quotas are ill-suited to managing this challenge or the broader issue of transportation bottlenecks faced by the Canadian oil and gas industry.

Alberta’s problems began long ago: because its crude is landlocked, much of it must travel south to U.S. refiners. Pipelines are the cheapest way to transport crude on land, but new pipelines like Enbridge’s have been tied up in federal and political battles. This meant that when world crude prices fell sharply across the board last November, Alberta’s transportation congestion caused Western Canadian Select (WCS) to fall even further than other global crude prices, including the global benchmark West Texas Intermediate (WTI). WCS normally trades $10-$15 below WTI. But late last year the spread exploded........

© Edmonton Journal