Province on Husky oil well shut-in: the limit on production is operators decision

The Minister of Energy’s office has responded to Husky Energy citing curtailment as the reason they’re shutting in hundreds of oil wells in the lakeland region.

Spokesperson Michael MacKinnon said that Premier Rachel Notley’s leadership was instrumental in protecting the value of oil during this “short-term crisis.”

“Our goal is and always has been to match production levels to what can be shipped using existing pipeline and rail capacity, while encouraging a reduction in storage levels. On January 30, we eased oil production limits ahead of schedule and we will continue to monitor this closely and adjust as necessary.

“Application of the oil production limit is being done at the operator-level, meaning it’s up to them – not the government – where they make their business decisions. The decision to temporarily limit oil production was applied fairly and equitably and has been critical to saving jobs across the energy sector,” said MacKinnon.

Husky had said earlier this week that they hopeful that continued talks with the province could lessen impacts in the future.

The impact will hurt oilfield service providers more than company employees.

The Tucker thermal plant will also be curtailed.

The province eased limits for February and March to 3.63 million barrels per day, which is a 75,000-barrel per day increase from the January limit of 3.56 million barrels per day.

Bonnyville and Cold Lake Mayors worry about local economy

Mayor Gene Sobolewski said he doesn’t have as much information as opposed to the potential shutdown of the ECHO pipeline with CNRL.

“There will be an impact for some people who are doing heavy oil service industries, but we’ll have to see if it’s so much in our region or it’s broader. Really, I think the main issue is the Western Canadian Select is closer together, but let’s see if now we can move more oil. It’s unfortunate when government actually has to influence the market. I’m always adamantly opposed to that,” said Sobolewski.

DLM Oilfield Services has closed its doors in Bonnyville and Elk Point, and it’s uncertain if more are to follow.

Mayor of Cold Lake Craig Copeland says its unfortunate Husky has made a business decision.

“Truckers in the area are going to cut killed. The poor independent truckers right now, I don’t even know if there’s any work, and if there is it’s very little,” he said.

“Each company has been given a number that they’ve cut got to cut back and each company has to make a business decision. It appears it’s easier to shut-in the cold flow wells in Lloyd and Bonnyville that run there, that whole Frog Lake, Vermilion, Mannville area, it’s easier to shut those wells in, and they’ve also reduced Tucker Lake it sounds like.”

Copeland says he was against government intervening.

“You should never have government getting int he business of manipulating the price of oil and that’s what they tried to do by bringing up WCS. It did come up but if government wants to get in the role of manipulating the price of oil – I don’t want any part of it. I think they’ve should’ve tried to cut the expenses of oil companies and tried to reduce their daily operating cost,” he said.

“Luckily we have the military base, but it’s hurting big time. It’s not good. A lot of houses are underwater. People are underwater on their mortgage…the banks and mortgage companies own 10-12 per cent of the homes in Cold Lake. It’s not pretty, businesses are hurting big time,” Copeland said.