What’s going on
Today Alberta produces 190,000 barrels of raw crude and bitumen per day more than we can ship by rail or pipeline. And we now have 35 million barrels of processed oil in storage – 16 million barrels too many.
This glut is driving down the price of Alberta’s oil, costing Canadians $80 million a day.
What we're doing
To address the excess supply, starting in January 2019 Alberta is reducing – or curtailing - production by 325,000 barrels per day until we have enough shipping space to clear the current glut and improve prices. This is expected to take three months.
After that, curtailment will be reduced to a point where production is balanced with export capacity – a reduction of about 95,000 barrels per day on average through the rest of 2019. Under the proposed rules, the government's authority to curtail production will end on December 31, 2019.
This temporary reduction will be monitored regularly and adjusted as needed, so production isn’t reduced more than is necessary.
Reduction levels will be set at the operator level and will be based off its highest six months of production over the past year:
- reductions will apply to both oil sands and conventional oil
- the first 10,000 barrels produced by each operator are exempt
- as there will still be significant oil available, refining operations will be able to access the oil supply required to meet their refining needs
The Alberta Energy Regulator will administer this reduction in production on behalf of the government. To deal with unforeseen issues, the AER will establish a process to address company-specific concerns and make policy recommendations back to the Government of Alberta.
Why we're doing it
Every Albertan owns the oil in the ground. We have a responsibility to get our product to market for a fair price.
Right now, the lack of shipping capacity and excess supply means we’re forced to sell it at a discount.
A industrywide reduction is a fair, short-term action to save jobs, support our industry and get the best price for Albertans. The glut will only be reduced if we work together.
What else we’re doing
Reducing production is only one of the actions we're taking to get our oil supply into line with our shipping capacity.
Through our made-in-Alberta energy strategy, we are already:
- supporting energy diversification by increasing partial upgrading and expanding the petrochemicals sector so we can get more value from our energy resources here at home
- buying rail cars to increase shipments by 120,000 barrels per day by the end of 2019
- pushing for the construction of new pipelines to get our product to world markets at world prices
- working with energy leaders on solutions that make sense for business and Albertans
How we got here
May 2, 2018
Government creates a crude by rail committee to examine ways to ease rail transportation bottlenecks.
Crude by rail committee reports back to government.
September 17, 2018
Government identifies growing differential as increased concern and begins outreach to industry on topic.
October 11, 2018
Differential hits $52 US per barrel. Government officials meet with key industry stakeholders to discuss.
October 22, 2018
Premier meets directly with energy industry CEOs to discuss differential and possible solutions.
October 26, 2018
Government of Alberta hires consultant to negotiate increasing export capacity by rail to reduce the differential.
October 30, 2018
Industry consultations on reducing the differential through increased rail capacity.
November 19, 2018
Premier announces the appointment of special envoys to meet with industry and find solutions to the differential.
November 20, 2018
$2.1 billion of funding for energy upgrading is announced to create more value as part of the Made-in-Alberta strategy.
November 28, 2018
Premier announces the Government of Alberta will be investing in 120,000 barrels per day of rail transportation capacity.
December 2, 2018
- Premier acts to protect value of Alberta's resources (Dec. 2, 2018)
- Oil upgrading proposals worth billions (Nov. 22, 2018)
- Premier establishes Energy Upgrading Unit (Nov. 19, 2018)
- Building on Alberta's energy strengths (Mar. 12, 2018)
- Investing in a diversified energy future (Mar. 8, 2018)
- Securing Alberta's future through energy diversification (Feb. 26, 2018)