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Limits on oil production no longer needed, Alberta government says

Click to play video: 'Alberta government loosens curtailment rules for new oil wells' Alberta government loosens curtailment rules for new oil wells
WATCH (Nov. 8, 2019): Effective immediately, the Alberta government is loosening curtailment rules for new oil wells - for conventional oil wells in Alberta, including fracked wells. Tom Vernon explains – Nov 8, 2019

Alberta will let its oil production curtailment policy expire on Dec. 31.

UCP Energy Minister Sonya Savage says the province has not set production limits on the oil industry since December of 2020. She said the government’s power to curtail oil production is no longer needed and will be allowed to expire.

“The market is now working as it should: oil production has reached pre-pandemic levels but is within export capacity, and storage levels are expected to remain within the normal range of operations,” Savage said in a statement.

“This is in large part because Enbridge’s Line 3 is now online and operational and the Trans Mountain Expansion is expected to come online in early 2023.”

Read more: Alberta to lift oil production curtailment at the end of 2020

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Alberta’s previous NDP government decided to impose limits on the province’s oil producers in late 2018 in an effort to align production with export capacity.

At that time, pipeline constraints and a resulting supply bottleneck were causing Canadian crude oil to trade at a steep discount.

Click to play video: 'Alberta to continue oil production curtailment until 2020 as pipeline delays persist' Alberta to continue oil production curtailment until 2020 as pipeline delays persist
Alberta to continue oil production curtailment until 2020 as pipeline delays persist – Aug 20, 2019

However, since then, Enbridge’s Line 3 pipeline replacement has become operational. The Trans Mountain pipeline expansion is expected to come online in early 2023.

Read more: Suncor calls end of Alberta oil quotas a ‘positive signal’ as it reports $302M loss

Savage says the market is now working as it should and oil companies should feel confident that production will not be limited moving forward.

“Oil production limits were intended to be a temporary measure when storage levels were high and there were significant pipeline constraints,” she said. “This meant our province’s resources were being sold at an extreme discount. The curtailment policy aligned production with export capacity to protect the value of Alberta’s oil.

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“We will continue to monitor production, inventories, pipeline capacity and rail shipments to ensure that production does not exceed what the province can export. However, all forecasts indicate that the regulatory authority to curtail oil production is unnecessary as Alberta’s economy continues its strong recovery.”

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Energy expert reacts to Alberta oil production increase – Jul 27, 2019

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