Enhancements to the curtailment policy will help ensure Alberta gets fair value for its oil while continuing to fight for increased market access.
Because of continuing pipeline delays, including Enbridge Line 3, these changes provide government a way to work with affected producers to manage production through 2020, as required. 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.
“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.”Sonya Savage, Minister of Energy
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 most significant changes to the curtailment policy include:
- Moving the curtailment end date to Dec. 31, 2020, with possible earlier termination.
- Increasing the base deduction from 10,000 to 20,000 barrels per day and adjusting the curtailment formula accordingly, resulting in an overall increase of about 25,000 barrels per day to the allowed production limit for October.
- Providing 60 days’ notice of any changes.
- Adding ministerial discretion to set production limits after a merger or acquisition.
- Extending the provision for single-operator oil sands facilities’ minimum operations in winter to Dec. 31, 2020 and include December 2019.
- Reducing the number of affected producers from 29 to only 16 of more than 300 producers in the province.
- Reducing red tape for small producers.