Alberta’s government will stop setting monthly oil production limits to allow producers to utilize available pipeline capacity and create jobs. 

While the government will extend its regulatory authority to curtail oil production through December 2021, it will not set production limits due to 16 per cent of Alberta’s crude oil production remaining offline, down from 22 per cent at the start of the COVID-19 pandemic. At this time the Government of Alberta does not plan to resume production limits. 

Sonya Savage, Minister of Energy, says, “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. 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.” 

At the same time, the government will continue to press for the timely completion of vital pipeline projects, what they believe is the only long-term solution for protecting the value of our energy resources. 

Since January 2019, production limits have aligned production with export capacity, protecting the value of the province’s oil by helping prevent Canadian crude from selling at large discounts. The limits were intended as a short-term measure, but ongoing delays to pipeline projects have led to the monthly production limits continuing through November 2020. 

These delays mean that Alberta’s production capabilities still exceed its takeaway capacity, but – due to the COVID-19 pandemic and the resulting economic downturn – Alberta oil companies have been producing well below the established production limits for several months. 

The completion of long-awaited pipelines – including Keystone XL, the Trans Mountain expansion, and Enbridge Line 3 – is expected to enhance the province’s permanent ability to balance production and takeaway capacity, helping to ensure Alberta’s resources are exported at full value. 

Government will closely monitor production, inventories, pipeline capacity and rail shipments to ensure that production does not exceed what the province can export. Current forecasts show that inventories are expected to remain low, with sufficient export capacity to allow the system to operate efficiently on its own well into 2021. 

Should forecasts show storage inventories approaching maximum capacity, government could put production limits back in place, giving industry 30 to 60 days of advance notice to enable companies to plan their production.