Alberta oil output limits eased as stockpiles diminish

On Wednesday, the Notley government announced it will ease the Alberta oil output limits, increasing production in February and March to 3.63 million b/d.  Suncor photo.

Alberta oil output limits up by 75,000 b/d

The Alberta government announced on Wednesday that it will ease Alberta oil output limits thanks to falling crude inventories.

In December, Rachel Notley imposed production limits after crude storage stockpiles almost doubled the normal levels.  The increased inventories drive down oil prices, resulting “in the resources owned by all Albertans being given away for pennies on the dollar,” according to a government press release.

“We’re not out of the woods yet, but this temporary measure is working,” said Premier Notley.

“While it hasn’t been easy, companies big and small have stepped up to help us work through this short-term crisis while we work on longer-term solutions, like our investment in rail and our continued fight for pipelines.”

Next month and March, the provincial government is boosting production limits by 75,000 barrels per day (b/d) to 3.63 million b/d.  In January, production was cut to 3.56 million b/d.

According to the press release, the government had set the limits in an effort to match production levels to what can be shipped using existing pipeline and rail capacity.

The Notley government says “the decision to temporarily limit oil production was applied fairly and equitably, and has been instrumental in saving jobs across the energy sector”.

Since bringing in the restrictions, storage levels in Alberta dropped ahead of schedule, declining by five million barrels to 30 million barrels in storage.  Independent data suggests storage levels have been falling by about 1 million barrels per week since the beginning of the year and are on track to clear the storage glut.

The production limits called for the first 10,000 b/d a company produced to be exempt from any restrictions.  This meant that 28 of over 300 producers in Alberta were subject to the production limits.

Since the cutbacks were introduced, government has amended its formula for determining how to allocate space under the production limit. It was determined that starting in February government would use each company’s highest level of production during their best single month from November 2017 to October 2018 as its baseline production level.

This was a change from the original formula where the baseline would be established on a company’s highest six-month average over the same time period.

“I want to thank Alberta producers for working with us to protect the jobs and livelihoods of thousands of Alberta families and businesses, and your cooperation has been key to easing these limits ahead of schedule,” said Notley.




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