Alberta to stop oil curtailment program

EDMONTON (660 NEWS) – The provincial government is doing away with what was supposed to be a short-term measure to deal with a massive drop in oil prices.

The United Conservatives said it will continue with oil curtailments through December but plan to stop the initiative afterwards.

“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.”

WATCH: What will an oil production cut mean for Alberta families?

The province said 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 said 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 move was brought forward in January 2019 under the former NDP government in response to an oversupply which caused oil prices to plummet.

The UCP said construction delays for pipelines meant the measures had to stay in place longer than they anticipated.

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.

In August, Alberta’s oil production was 3.10 million barrels per day, less than the 3.81 million barrels per day curtailment limit.

The government said it will continue to press for the timely completion of vital pipeline projects to help protect the value of energy resources.

-With files from The Canadian Press