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Alberta lifts curtailment as of December 2020

Provincial Press Release October 23, 2020 @ 5:01AM published at 1:34PM

Minister of Energy Sonya Savage

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.

“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.” Sonya Savage, Minister of Energy

At the same time, the government will continue to press for the timely completion of vital pipeline projects, 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 – will 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.

Quick facts

  • In August, Alberta production was 3.10 million barrels per day, significantly less than the 3.81 million barrels per day curtailment limit.

  • According to Genscape, as of Oct. 16 inventories were at about 20 million barrels. When production limits were introduced in January 2019, inventories were approaching 40 million barrels.

  • Due to the economic effects of COVID-19, experts do not expect production in Western Canada to be above pipeline capacity before mid-2021 at the earliest, and rail and storage inventories are expected to remain low.

  • Prior to COVID-19, government had planned to exit curtailment by the end of 2020 provided export routes were in place, including the completion of Enbridge Line 3. Enbridge is proceeding with the final permitting process in the U.S. and estimates Line 3 will be in service in 2021.


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