Western Texas Intermediate (WTI) crude continues to rise following a year of severe depreciation of Canada’s crude oil supply..On April 20, 2020, WTI Crude reached historic lows and dropped by almost 300 per cent, trading at negative $37 per barrel..The economic shock of COVID-19 worsened conditions for the energy sector when a price war erupted between oil giants Saudi Arabia and Russia in early March after OPEC’s failures to agree on deeper supply cuts..Experts found oil demand bottomed out 30 per cent in April – conditions the market has not seen over the last 40 years since world oil markets developed..As supply remained steady while demand struck record-breaking lows, the industry quickly began running out of storage space to put their oil..However, oil prices steadily recovered in May to $35 per barrel – jumping 88.38 per cent to register the best month on record for WTI, despite the petroleum industry still reeling from the effects of the coronavirus pandemic..A once shining epicentre for the industry, Alberta’s oil producers remain starved for pipelines, with investors continuing to flee the province..In December 2020, two rival oil and gas companies in Husky and Cenovus merged in a $3.8-billion all-share takeover bid. The companies combined 8,600 person workforce downsized in early-2021, cutting nearly 2,000 employees..On President-elect Joe Biden’s first day in office, he signed an Executive Order to revoke Trump’s Keystone XL permits, costing Albertan taxpayers at least $1.2 billion after Premier Jason Kenney’s investment boondoggle..Kenney called the revocation a gut punch and an insult and threatened to sue, while Prime Minister Justin Trudeau expressed some disappointment..And now, Enbridge Line 5 – the major infrastructure connecting western Canadian crude to Eastern Canadian markets – is at risk of being shutdown by Michigan’s Governor citing environmental concerns..Not to mention Royal Dutch Shell reducing its presence in Alberta with a $900 million sale of assets to Calgary-based company Crescent Point Energy Corporation. This comes after it publicly stated it passed peak oil production last week, and sought carbon offsets as a new venture..However, it was not all bad news for the ailing sector..In January, the Alberta Energy Regulator reported record-high oil sands production in December 2020, hinting neither demand nor supply was the issue longterm. It remains the transportation bottleneck..Oil-by-rail exports surged by 87 percent in November 2020 – the same month, Alberta’s oil production hit an all-time high..Transporting crude oil by rail is costlier to industry and riskier on conservation efforts than pipelines..Despite WTI Crude rising significantly to $61 per barrel, there are no pipeline projects underway, and it’s unlikely that there will be new ones anytime soon..Dhaliwal is the Western Standard’s Edmonton reporter.
Western Texas Intermediate (WTI) crude continues to rise following a year of severe depreciation of Canada’s crude oil supply..On April 20, 2020, WTI Crude reached historic lows and dropped by almost 300 per cent, trading at negative $37 per barrel..The economic shock of COVID-19 worsened conditions for the energy sector when a price war erupted between oil giants Saudi Arabia and Russia in early March after OPEC’s failures to agree on deeper supply cuts..Experts found oil demand bottomed out 30 per cent in April – conditions the market has not seen over the last 40 years since world oil markets developed..As supply remained steady while demand struck record-breaking lows, the industry quickly began running out of storage space to put their oil..However, oil prices steadily recovered in May to $35 per barrel – jumping 88.38 per cent to register the best month on record for WTI, despite the petroleum industry still reeling from the effects of the coronavirus pandemic..A once shining epicentre for the industry, Alberta’s oil producers remain starved for pipelines, with investors continuing to flee the province..In December 2020, two rival oil and gas companies in Husky and Cenovus merged in a $3.8-billion all-share takeover bid. The companies combined 8,600 person workforce downsized in early-2021, cutting nearly 2,000 employees..On President-elect Joe Biden’s first day in office, he signed an Executive Order to revoke Trump’s Keystone XL permits, costing Albertan taxpayers at least $1.2 billion after Premier Jason Kenney’s investment boondoggle..Kenney called the revocation a gut punch and an insult and threatened to sue, while Prime Minister Justin Trudeau expressed some disappointment..And now, Enbridge Line 5 – the major infrastructure connecting western Canadian crude to Eastern Canadian markets – is at risk of being shutdown by Michigan’s Governor citing environmental concerns..Not to mention Royal Dutch Shell reducing its presence in Alberta with a $900 million sale of assets to Calgary-based company Crescent Point Energy Corporation. This comes after it publicly stated it passed peak oil production last week, and sought carbon offsets as a new venture..However, it was not all bad news for the ailing sector..In January, the Alberta Energy Regulator reported record-high oil sands production in December 2020, hinting neither demand nor supply was the issue longterm. It remains the transportation bottleneck..Oil-by-rail exports surged by 87 percent in November 2020 – the same month, Alberta’s oil production hit an all-time high..Transporting crude oil by rail is costlier to industry and riskier on conservation efforts than pipelines..Despite WTI Crude rising significantly to $61 per barrel, there are no pipeline projects underway, and it’s unlikely that there will be new ones anytime soon..Dhaliwal is the Western Standard’s Edmonton reporter.
