UPDATE 3-Some Canadian producers push back as Alberta orders oil cuts

* Suncor, Husky, Imperial push against Canada move

* CNRL, Cenovus, CNOOC-Nexen support the move

* Canadian oil discount narrows after weekend announcement

* Oil deliveries constrained by full pipelines (Adds comments from CNOOC-Nexen, CNRL, price details)

NEW YORK/VANCOUVER, Dec 3 (Reuters) - Several oil companies in Canada pushed back on Monday against Alberta's mandated cuts in crude production, warning about excessive government intervention even as the discount on Canadian crudes narrowed sharply on the curtailment plan.

Alberta Premier Rachel Notley said on Sunday the government would force producers to cut output by 8.7 percent, or 325,000 barrels per day (bpd), until excess crude in storage is reduced.

The news slashed the discount on Western Canada Select (WCS), with the heavy crude blend trading in the low $20 range below the West Texas Intermediate (WTI) benchmark on Monday, down from Friday's settle of $32 below WTI, according to Shorcan Energy brokers.

Light synthetic crude from the oil sands was trading $15-$20 below WTI, down from Friday's settle of $25 below WTI.

While producers said they would comply with the mandatory cuts, executives from Canada's Suncor Energy Inc, Husky Energy Inc and Imperial Oil, integrated producers with domestic refinery and upgrading capacity, expressed disappointment.

"We believe the market is working and view government-ordered curtailment or other interventions as possibly having serious negative investment, economic and trade consequences," said Husky in a statement.

However, major producers like Cenovus Energy Inc and Canadian Natural Resources Ltd (CNRL) were vocal with their support.

"At $35 or $45 differentials - the lion's share of companies in this industry are barely breaking even or actually losing money," Cenovus Chief Executive Alex Pourbaix said in an interview.

"When you are just breaking even or you are actually losing money, you can do nothing other than the bare minimum. ... It's pure survival mode."

The move is unusual for a market economy like Canada, in comparison with members of the Organization of the Petroleum Exporting Countries whose oil companies are often state-owned.

Canada is one of the world's largest oil producers, supplying more than 4.2 million barrels a day, but WCS prices slumped in October to a discount of more than $52 a barrel below WTI due to the transportation constraints and storage glut.

Suncor is assessing the impact of the government's announcement, it said, noting that the market is the most effective means to balance supply and demand and normalize differentials.

"Less economic production was being curtailed and differentials were narrowing as a result of market forces," Suncor said in a statement, adding that specific effects from the cuts will be discussed in its upcoming 2019 outlook.

Imperial Oil CEO Rich Kruger said the company was reviewing the impact on its investments, adding that "this intervention appears not to recognize the investment decisions companies have made to access higher-value markets."

But CNRL cheered the Alberta government's move, noting "these are unprecedented times and they call for urgent action." Nexen, a subsidiary of CNOOC Ltd, said the actions would help strengthen the Alberta economy.


Canada's production has steadily increased over the last year and is set to grow some 17.8 percent through 2020, according to the Canadian Association of Petroleum Producers, but shipments have been constrained by the lack of pipelines out of Alberta to the United States and overseas markets.

Several projects, including TransCanada Corp's Keystone XL to the United States, and the expansion of the government-owned Trans Mountain pipeline to the West Coast, have been hamstrung by battles with opponents.

"The heavy-handed action is a short-term remedy but not long-term solution," said Michael Tran, commodity strategist at RBC Capital Markets. "Rail cars aside, there's no long-term solution that does not involve building a pipeline."

The mandated cuts are controversial because heavily integrated producers, like Suncor and Husky, benefit from the low crude prices to feed their refineries. They also tend to have more secure pipeline access.

Shares of several of the affected Canadian companies slumped on Monday after a brief morning rally in Toronto. Imperial Oil shares were down 3.99 percent at C$37.99 in Toronto, while Suncor shares dropped 0.35 percent to C$42.69.

Cenovus shares were up 10.79 percent at C$10.88, while CNRL shares rose 8.66 percent to $36.28. ($1 = 1.1724 Canadian dollars) (Reporting by Devika Krishna Kumar in New York and Julie Gordon in Vancouver Editing by Jeffrey Benkoe, Matthew Lewis and Richard Chang)