MNI DATA REACT: Canada Energy Capacity Use Highest Since 1999

By Greg Quinn

     OTTAWA (MNI) - Canadian oil and gas companies worked at their highest rate

in a decade in the second quarter, a surprise revival after the Alberta

provincial government imposed production caps in response to plunging prices.

     The industry's output climbed 6.7% and production capacity was little

changed, Statistics Canada said Wednesday from Ottawa. That lifted the capacity

utilization rate to 87.3% from 82.2%, the highest since the second quarter of

1999.

     Most of Canada's oil production is from a heavy grade trapped in sand

deposits in Alberta. Investment in the region has plunged in recent years on

higher costs, increased production of U.S. shale oil and a shortage of pipeline

capacity to send product to refineries. Falling prices for benchmark global

crude prices and a wider discount on Alberta heavy crude late last year led the

provincial government to cap production, limits that have since begun to ease.

     "This gain was driven by increased production of oil sands extraction in

Alberta and coincided with the continued easing of temporary restrictions on

production imposed by the provincial government in January," Statistics Canada's

report said.

     The energy gain helped lift Canada's overall industrial capacity use to

83.3% in the second quarter from 81.1% in the first. Manufacturing also rose to

80.3% from 78.5%.

     The Bank of Canada held its key lending rate at 1.75% last week, resisting

a global trend of signaling more stimulus. Policy makers said the domestic

economy was showing resilience to global trade fights and Canada is close to its

full potential. 

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

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