Alberta’s oil production curtailment policy to end Dec. 31

Alberta Energy Secretary Sonya Savage announced Dec. 9 that the provincial policy on restraining oil production, a strategy to reduce price-depressing gluts, will end Dec. 31.

No production limit has been set or enforced since December 2020, Savage said. By ending the curtailment policy, the provincial government is eliminating one source of investment uncertainty for the oil industry, the energy secretary said.

“Oil production limits were intended to be a temporary measure when storage levels were high and there were significant pipeline constraints,” Savage said. “This meant our province’s resources were being sold at an extreme discount.”

Alberta oil production has recovered from the COVID-19 pandemic levels, she said. But that apparently does not create the risk that production will exceed export capacity and strain storage capacity.

“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,” she said.

The problem developed over a few years as litigation and political opposition stalled or threatened to stall pipeline plans, including Enbridge Inc.’s Line 3 through Minnesota, Enbridge’s Line 5 through Michigan, TC Energy Corp.’s Keystone XL project, and the Trans Mountain Expansion, now government-owned.

Curtailment was scheduled to end Dec. 31, 2019, but in the middle of that year the ongoing concern about high volumes of oil lingering in Alberta storage led to an extension of the curtailment policy (OGJ Online, Aug. 29, 2019).

Now, “storage levels are expected to remain within the normal range of operations,” Savage said.

The Alberta government reported the province’s total production of both conventional and unconventional oil reached 18.9 million cu m (about 119 million bbl) in October, higher than the highest monthly total in 2019, before the pandemic hit.