The Canadian province of Alberta said on Thursday it would allow companies to produce additional oil if they move it by rail, easing curtailment rules that were designed to reduce transport bottlenecks.
The special production allowance takes effect in December, Energy Minister Sonya Savage said in a statement.
“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,” Savage said.
Major producers, including Suncor Energy and Canadian Natural Resources Ltd , suggested in July that the government allows them to boost output above curtailment limits if that incremental production is exported by rail.
The allowances will be based off average rail shipments by producers in the first quarter of 2019.
Alberta introduced mandatory production curtailments from Jan. 1 this year to ease congestion on export pipelines and support crude prices. In August, Premier Jason Kenney’s government extended those curtailments into 2020 because of slow progress in building new pipelines.
Railways moved 310,146 barrels of oil per day (bpd) in August, according to the most recent data from the Canada Energy Regulator, up 35% on the year, but shy of a record 353,789 bpd moved in December.