The Alberta government has signalled that it’s going to allow petroleum producers to increase oil output levels above current provincial quotas, under certain conditions.
The allowance will enable operators to use all available rail capacity in Alberta, as many oil producers are capable of producing more than their curtailment limits permit, the government said in a news release Thursday morning.
“The special allowance program will protect the value of our oil by ensuring that operators are only producing what they are able to move to market. Pipeline delays ultimately have constrained market access and dampened investment in our oil sector. This program will lead to more production and increased investment, benefitting industry, our province’s bottom line, and, ultimately, Alberta taxpayers,” said Minister of Energy Sonya Savage in the release.
Industry approached government with a proposal to ship more crude by rail in exchange for curtailment relief. The short-term approach will help address the continued lack of takeaway capacity caused by pipeline delays that are negatively impacting Alberta’s oil and gas sector, the government said.
Government will work with operators to set the special production allowance baseline, which will be based off the operator’s first quarter average rail shipment from 2019.
The production limit in October of 3.79 million barrels per day will increase to 3.80 million barrels per day in November.
The special production allowance to take effect starting in the December production month, will involve an application process for operators.
More to come…