The province says it will extend its regulatory authority to continue the program for another year but doesn’t plan to use it after the end of November.
It says the monthly curtailments are no longer necessary because 16 per cent of Alberta’s crude oil production is offline, down from 22 per cent at the start of the COVID-19 pandemic.
The program has been controversial from the start, with oil producers such as Cenovus Energy Inc. largely in favour of it while oil producers who also own refining operations, such as Imperial Oil Ltd., have been adamantly opposed.
The allowable production quota was gradually raised from 3.56 million barrels per day in January 2019 to 3.81 million bpd by year-end, a level maintained through the first 11 months of 2020.
The province says production was actually 3.1 million bpd in August and it’s not expected to exceed export capacity before mid-2021.
The government says it extended what was intended to be a short-term measure because of ongoing delays to pipeline projects that would increase the province’s export capacity.
“Maintaining the stability and predictability of Alberta’s resource sector is vital for investor confidence as we navigate the economic conditions brought on by the pandemic, the commodity price crisis, and the need for pipelines,” said Energy Minister Sonya Savage.
“This purposeful approach serves as an insurance policy, as it will allow Alberta to respond swiftly if there is a risk of storage reaching maximum capacity while enabling industry to produce as the free market intended.”
The province quoted Genscape in noting that there were about 20 million barrels in storage as of Oct. 16, down from nearly 40 million when the curtailment program began.
This report by The Canadian Press was first published Oct. 22, 2020.29dk2902l