Alberta’s government will allow producers to exceed production limits to ship more crude by rail from the Canadian province.
Beginning in December, oil producers can request to go above their existing curtailment rules, Energy Minister Sonya Savage said on Oct. 31.
“The special allowance program will protect the value of our oil by ensuring that operators are only producing what they are able to move to market,” Savage said in a statement. “Pipeline delays ultimately have constrained market access and dampened investment in our oil sector.”
The rules for the program mandate that all additional crude must go onto the rail and cannot be diverted to pipelines.
The province characterized the increase as a temporary measure to meet demand.
Alberta said it would base the special allowance on crude-by-rail shipments from the first quarter of 2019. The province currently has a crude and bitumen production limit of 3.81 million barrels per day in December.
The rail industry had been closely watching developments in Edmonton to see if the provincial government would ease curtailments – in place to shore up pricing.
But Canadian National (NYSE: CNI) and Canadian Pacific have said they have additional capacity to ship crude.
Underscoring the struggles of Western Canada’s energy sector, oil and gas company Encana announced it was moving its corporate headquarters to the U.S. and changing its name.
The company said the move was purely intended to attract more investment from U.S. index funds.
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