Oil production limit

What’s going on

Alberta produced more crude oil in 2018 than could be shipped for export by rail or pipeline. This affected storage levels, Canadian crude oil prices and other aspects of the market.

To protect the value of our oil, the Government of Alberta temporarily limited production to match export capacity to prevent Canadian crude from selling at large discounts.

Due to continuing pipeline delays, oil production limits remain necessary through 2020. The curtailment policy has also been adjusted to give industry more flexibility to make timely business decisions and reduce red tape for small producers.

Production limits

The oil production limit has been extended to December 31, 2020, with possible earlier termination. This limit will be monitored closely and adjusted to better match export capacity.

Monthly production limits for raw crude and bitumen are set at:

• October: 3.79 million barrels per day
• November: 3.80 million barrels per day
• December: 3.81 million barrels per day
• January: 3.81 million barrels per day
• February: 3.81 million barrels per day

Exemption for new conventional wells

Effective November 8, 2019, new wells drilled for conventional oil will be exempt from the production limit.

This exemption will encourage the drilling of new conventional oil wells, increased investment, and the creation of more jobs for Albertans.

Conventional oil is defined as any oil produced outside the oil sands designated areas and formations.

Special production allowance

Effective December 2019, operators can apply, on a monthly basis, to increase oil production – if the additional product is moved by new rail capacity – in order to meet increasing demand.

The special production allowance will give producers temporary curtailment relief equivalent to incremental increases in rail shipment. This short-term approach will help address the continued lack of takeaway capacity caused by pipeline delays that are negatively impacting Alberta’s oil and gas sector.

Under this special allowance:

• all additional product must be moved out of the province by new rail capacity and producers cannot overproduce their allowance
• volumes moved under an allowance by rail cannot be applied to pipelines

How to apply

Operators who decide to apply for a special production allowance will submit an application to Alberta Energy.

If approved, a Ministerial Order will be issued and include all terms and conditions that the operator is subject to.

Operators will be held accountable through info provided during the application process, as well as validation after the production month concludes.

Industry information

The Alberta Energy Regulator administers the production limit on behalf of the government. The government’s authority to limit production ends December 31, 2020.

Under the formula that determines how space is allocated under the production limit, each company’s baseline production level is based on its highest level during their best single month from November 2017 to October 2018.

• production limits apply to both oil sands and conventional oil, it does not apply to pentanes or natural gas
• the first 20,000 barrels produced by each operator are exempt
• refining operations can access the oil supply required to meet their refining needs as there is still significant oil available

An AER panel will review company-specific concerns and make policy recommendations back to the Government of Alberta. The panel can be reached at curtailment@aer.ca.

Industry information

• Special Production Allowance Application Form (PDF, 371 KB)
• Special Production Allowance Application Data Form (XLSX, 50 KB)
• Special Production Allowance Volume Verification Officer's Certificate (PDF, 438 KB)
• Special Production Allowance Terms and Conditions (PDF, 34 KB)
• Presentation to Industry - December 6, 2018 (PDF, 455 KB)
• Curtailment rules presentation - February 8, 2019 (PDF, 784 KB)

Visit Energy Information Letters for all industry notices.

Timeline