OPEC tie-in sought by Alberta; fresh clout for cartel seen
Canada's largest oil-producing province, Alberta, is sending a delegation to consult with the Organization of Petroleum Exporting Countries. It is a move that adds one more state to the roster of non-OPEC producers that seek relief from the ravages of low oil prices and that may participate in possible joint production cutbacks.
Discussions between OPEC and non-OPEC oil powers have intensified recently, as both groups recognize their mutual interests.
Norway has already agreed to trim its production to help stabilize prices.
This evoked vociferous protests from the United States, and Norwegian officials fear some reprisals from Washington.
The possible defection by Canada's major oil province as well can only further fuel the administration's concerns about a revitalized oil cartel.
The mission by Neil Webber, Alberta's energy minister, to the Geneva OPEC meeting on Monday is described as ``fact finding.''
Oil production rules -- including any possible cutbacks -- are provincial prerogatives under Canadian law, and the Canadian Embassy in Washington notes only that there is ``no problem as long as the minister sticks to provincial matters.''
Alberta's interest in facilitating a price agreement is clear. About half of its gross revenues derive directly or indirectly from oil.
Indeed, Alberta would rank fourth or fifth among OPEC producers, with output of 1.3 million barrels per day -- as much as Nigeria and more than Libya or Kuwait.
Low oil prices have devastated Alberta's economy. A Calgary daily oil bulletin reports that well drilling is off by 30 percent already this year -- and, more ominously, that drilling permits have dropped 50 percent and may still be falling.
The key question is whether the forthcoming ``consultations and information exchanges'' between Dr. Webber and his OPEC ministerial counterparts indicates de facto cooperation between Alberta and OPEC.
Alberta's interest in higher prices and stability is indeed clear, and the province has the legal authority to curb production for ``market economic'' objectives -- at least covering the 85-plus percent of oil produced on crown lands.
Moreover, the administrative apparatus exists for such pro-rationing in Alberta, used until now largely to allocate scarce export pipeline capacity.
This was once used to cut production during a fractious dispute between Alberta and the federal government in Ottawa, and the premier, Don Getty, had bruited such cooperation earlier.
OPEC, while long aiming at major non-OPEC producers such as Norway and Britain, had not anticipated possible cooperation from Alberta.
This unexpected signal represents a major psychological victory for the oil producers.
Only Britain, among oil powers, remains aloof, and the question in the oil world now is ``who is next?''