Paramount Resources CEO backs calls for production cuts to support oil prices

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CALGARY — The chairman and CEO of Paramount Resources Ltd. says Alberta should move immediately to impose a 10 per cent curtailment on all production in the province to drain a glut of oil and gas and support low prices.

Jim Riddell says his intermediate-sized company was looking at a higher drilling budget next year to increase production but has changed its outlook in the last six to eight weeks to instead favour spending “a small fraction” of its 2018 budget.

The normally media-shy CEO says he is speaking out on the issue because steep discounts on oil and gas prices in Western Canada — which he blames on a lack of pipeline export capacity — have had a “devastating impact” on his industry.

Alberta Premier Rachel Notley said in speeches in Ottawa and Toronto this week that the province has decided to buy as many as 80 locomotives and 7,000 rail tankers to move the province’s surplus oil to markets, with the first shipments expected in late 2019.

But Riddell says that will take too long and doesn’t provide a long-term solution to a structural problem of not enough pipelines.

He says he is instead “squarely on side” with the curtailment plan first put forward by oilsands giant Cenovus Energy Inc. and supported this week by Jason Kenney, leader of Alberta’s opposition United Conservative Party.

Curtailment is opposed by Calgary-based companies such as Suncor Energy Inc. and Husky Energy Inc. whose refining assets and firm pipeline contracts allow them to avoid most local price discounts.

In Friday’s fiscal update, the Alberta government says it now expects growth of 2.5 per cent in 2018, down from the 2.7 per cent growth forecast last spring, because of lower commodity prices.

Companies mentioned in this article: (TSX:POU, TSX:SU, TSX:HSE, TSX:CVE)

The Canadian Press