Open Letter to Premier Rachel Notley


Dear Premier Notley,

I publish the BOE Report and founded this oil and gas daily in 2012. Through the years we have had a front row seat to the many failures of our governments to act on getting this province market access solutions. Major projects have been killed or put on indefinite hiatus, and government interventions to try to salvage these projects has become the norm. But none of this matters right now.

We currently have no takeaway capacity and the industry is in free-fall. As you know, the current oil production of this province far exceeds the threshold it has to export. Everyone is feeling this. Crude oil in Alberta is selling for US $12-20/bbl.

I have spoken with hundreds of industry business owners and executives over the past month. What they’ve told me is horrifying: if this continues, historic, record-setting layoffs will be coming within weeks, and this will occur in every corner of this province. This will be coupled with historic, record-setting bankruptcies, and all the other terrible economic changes that will follow. And I’m sure you know how this will affect the provincial coffers as well.

We’re aware you appointed a 3-person group to engage the industry on how to handle this. Hopefully this group engaged a variety of companies in the oilpatch–small, mid and large-sized producers and service companies alike. The response from the overwhelming majority of them will be the same–that there needs to be production cuts across the province.

Ideally, this would’ve been a concerted effort by the largest oil producers in Alberta. Unfortunately that is not the case. Some senior producers in Alberta have rejected the idea. Likely due to major competitive advantages they have with regard to greater storage capacity, or other downstream advantages. However, these same companies will also benefit greatly from a higher oil price. Curtailing Alberta oil production in the short-term will only save companies and jobs.

Premier Notley, $12/bbl oil is the most efficient, aggressive job killer there is. And if anyone in this industry tells you different, they are lying to you.

There is a chance your appointed envoy comes back and recommends inaction or a tempered response. That would be the ultimate failure of an Alberta Premier. Solutions on the horizon (increased rail, Line 3 replacement, Trans Mountain pipeline, Keystone) are a minimum year away. The majority of companies in Alberta cannot weather this catastrophic storm for a quarter of that time.

We implore you to act in the interest of all the people of this province and mandate a shared production curtailment by senior producers (50,000+ bbl/d). The recommended 10% reduction will allow the industry to continue until long-term measures are hopefully put in place.

Josh Groberman, BOE Report Publisher

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