Energy companies roll out production cuts along with third-quarter results

Production cutbacks and deferred drilling programs are emerging as a common theme as Calgary-based oil and gas companies elect to leave barrels in the ground rather than sell at current low prices.

In third-quarter results released this week, energy companies large and small say they are avoiding wider-than-usual price discounts blamed on difficulty in getting barrels to market due to full export pipelines.

Analysts estimate as much as 100,000 barrels per day is being taken offline, not enough to make a big difference in pricing as it represents only a small percentage of Canada's overall output of about 4.6 million barrels of oil per day.

Athabasca Oil Corp. says it is dialling back production at its two steam-driven oilsands projects in northern Alberta by between 5,000 and 8,000 barrels per day in November and December to deal with heavy oil discounts that it expects will persist until next spring.

Meanwhile, Perpetual Energy Ltd. and Gear Energy Ltd. are among companies announcing drilling program deferrals until next year in hopes that flush production from new wells will find more robust prices. Gear adds it plans to put 40,000 barrels of heavy oil into surface storage tanks to be sold at a later date.

Dinara Millington, vice-president of research for the Canadian Energy Research Institute, says decisions to reduce production could affect provincial government royalty payments and federal government corporate income taxes.