NEB says too much oil and not enough pipelines are primary factors in price crash

A new report from the National Energy Board says the "primary factor" in recent steep discounts on western Canadian crude is that oil production outstripped export pipeline capacity by about 365,000 barrels per day.

The background report was compiled for federal Natural Resources Minister Amarjeet Sohi, who has asked the NEB for advice on how to optimize existing pipeline and rail transport.

The NEB says it has launched an online forum to gather public input and will meet with pipeline companies, producers, shippers, government officials and other experts in January to gather more answers for the minister.

The report notes that about one million barrels per day of nameplate Canadian oil pipeline capacity was added between 2013 and 2016 but there has been no new capacity since then.

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It estimates that the available pipeline takeaway capacity from Western Canada in September was 3.95 million barrels per day but that oil production had risen to about 4.3 million barrels per day.

Discounts narrowed in early December after the Alberta government announced it would impose temporary curtailments of 325,000 barrels per day on the industry starting Jan. 1, 2019, a measure designed to draw down storage and restore normal market prices.

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