Alberta extends cap on oil production

The Alberta government is extending by a year a program imposing production caps on oil companies as delays continue for new pipelines in Canada.

Because of continuing pipeline delays, including Enbridge Line 3, these changes provide a way to work with affected producers to manage production through 2020, as required, says the government in a news release.

Energy Minister Sonya Savage
Energy Minister Sonya Savage

“Our government is standing up for Alberta by fighting for pipelines, the economy and good jobs. We have listened to industry feedback and these adjustments to the curtailment policy will better position companies to make timely business decisions. We committed to protecting the value of our resources while boosting investor confidence and these enhancements will do just that, while creating good jobs for Albertans in the process,” said  Energy Minister Sonya Savage in a statement.

The government said the updated policy provides more flexibility for industry – including providing oil producers with more advanced notice of changes to production limits and doubling the base limit for curtailment.

“Without curtailment, we expect production to exceed takeaway capacity – the amount that can be shipped for export – by about 150,000 barrels per day. By more closely aligning production with takeaway capacity, curtailment is expected to help prevent extreme widening of the light-heavy differential. Without curtailment, large discounts for Canadian crude would be projected,” it said.

“Increasing the base limit for curtailment from 10,000 to 20,000 barrels per day will mean that only 16 of more than 300 producers in Alberta will be subject to the updated production limits. This will allow small producers to increase investment and production, without having a significant impact on overall provincial output. These changes will take effect in October 2019.”

The curtailment end date is now Dec. 31, 2020.

The new limits will take effect in October, with monthly raw crude and bitumen limits as follows:

  • 3.74 million barrels per day in August;
  • 3.76 million barrels per day in September;
  • 3.79 million barrels per day in October.

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