What’s going on
Alberta produces more crude oil and bitumen than we can export by rail or pipeline.
This glut drove down the price of Alberta’s oil, in late 2018, costing Canadians $80 million a day.
It’s crucial that we match our production levels to what we can export, while also reducing our storage levels.
What we're doing
On December 2, 2018, Alberta introduced a production limit on companies to address excess supply and export capacity. In January 2019, this limit was set at 3.56 million barrels of day of raw crude and bitumen. This does not include pentanes or natural gas liquids.
Starting in February 2019, Alberta is increasing production to 3.63 million barrels a day of raw crude and bitumen – a 75,000 barrel per day increase from the January limit.
Since the production limit was announced in December 2018, storage levels in Alberta have dropped ahead of schedule, reducing the glut to roughly 30 million barrels in storage – putting us on track to continue clearing the glut that led to discounts for Alberta oil.
We will continue monitoring the temporary limits and adjust as needed, so production isn't limited more than necessary.
Since the production limits were introduced, we’ve amended the formula that determines how to allocate space under the production limit. Starting in February, each company’s baseline production level will be based on its highest level during their best single month from November 2017 to October 2018. This is a change from the original formula where the baseline was established on a company’s highest six-month average over the same time period.
- production limits 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
Under the proposed rules, the government's authority to limit production will end on December 31, 2019.
The Alberta Energy Regulator is administering this limit in production on behalf of the government. To deal with unforeseen issues, the AER has a panel to review company-specific concerns and make policy recommendations back to the Government of Alberta. The panel can be reached at email@example.com.
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.
An industrywide limit 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
Limiting 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
Production limit first established at 3.56 million barrels per day.
Production increased by 75,000 barrels per day to a total of 3.63 million barrels per day
- Province eases oil production limits (Jan. 30, 2019)
- 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)