Alberta tweaks rules on oil production limits to spur conventional drilling

UCP government trying to reverse years of decline in drilling industry

Minister of Energy Sonya Savage listens while Premier Jason Kenney responds to the federal approval of the Trans Mountain Pipeline in Edmonton, Alberta, on Tuesday June 18, 2019. THE CANADIAN PRESS/Amber Bracken

Minister of Energy Sonya Savage listens while Premier Jason Kenney responds to the federal approval of the Trans Mountain Pipeline in Edmonton, Alberta, on Tuesday June 18, 2019. THE CANADIAN PRESS/Amber Bracken

Alberta is adjusting its rules on oil production limits to give companies incentive to drill more conventional wells.

Energy Minister Sonya Savage says that starting immediately, any oil produced from a new well will not be subject to the limits.

The province expects the change will spur producers to drill hundreds of new wells and that each well will create about 145 jobs.

“While we want an orderly exit out of curtailment altogether, our communities and drilling sector cannot wait,” Savage told a legislature news conference Friday.

“That is why we’re taking this action today to encourage investment and bring back jobs.”

In September, Alberta produced 480,000 barrels a day of conventional oil. About one-fifth of that was from operators working under the curtailment rules.

There are exemptions in place so that small producers are not affected by the limits.

The move is the latest action by the government to try to increase investment and employment in Alberta’s oil and gas industry and reverse years of declines in drilling.

Due to pipeline bottlenecks, the former NDP government limited the amount companies could produce to prevent a surplus such as the one last year that sharply reduced prices for Alberta oil.

The United Conservative government has since extended the limit by a year to the end of 2020.

But Savage said Friday the expectation is that by the time extra oil from the new wells is ready for shipping, there will be more pipeline capacity, such as Enbridge’s retrofitted Line 3 to the U.S. Midwest, and more rail cars. That should avoid another surplus that would hurt prices for Alberta oil, she said.

“We wouldn’t be doing this if we were not confident that this (change) could handle it,” said Savage.

Last week, the province announced it was easing production limits for companies shipping any extra crude by rail.

Premier Jason Kenney’s government is trying to offload $3.7-billion in contracts signed with rail companies by the previous NDP government to buy and ship more oil by rail to ease the bottleneck.

The Canadian Association of Oilwell Drilling Contractors said the drilling incentive, added to expanded production limits tied to rail, will help.

“2019 was another difficult year, and our activity levels were moving toward the historical lows of 2016,” association president Mark Scholz said in a news release.

“These efforts by the provincial government should encourage new production, and help get women and men in our industry back to work.”

Dean Bennett, The Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Asymptomatic testing will now be available for "priority groups" who are most likely to spread the COVID-19 virus to vulnerable or at-risk populations. File photo by THE CANADIAN PRESS
Alberta identifies 1,516 new COVID-19 cases on Sunday

Central zone has 1,849 active cases

A damaged unicorn statue is shown in a field outside of Delia, Alta. in this undated handout photo. It’s not often police can report that a unicorn has been found, but it was the truth Saturday when RCMP said a stolen, stainless-steel statue of the mythical beast had been located in a field not far from where he’d been taken. THE CANADIAN PRESS/HO, RCMP *MANDATORY CREDIT*
Mounties get their unicorn; stolen statue of mythical beast found in Alberta field

Police are still looking for suspects, and have called in their forensics experts to help

There were six additional deaths across Alberta reported over the past 24 hours, bringing the death toll to 1,926 since the beginning of the pandemic. (File photo)
Dr. Wayne John Edwards, 66, died Tuesday at Chinook Regional Hospital. (Cornerstone Funeral Home)
Lethbridge doctor becomes 7th Alberta health-care worker to die from COVID-19

Dr. Wayne John Edwards, who was 66, died Tuesday at the Chinook Regional Hospital in the southern Alberta city

Conservative leader Erin O’Toole holds a press conference on Parliament Hill in Ottawa on Tuesday, April 6, 2020. Top Tory leaders of past and present will speak with supporters today about what a conservative economic recovery from COVID-19 could look like. THE CANADIAN PRESS/Sean Kilpatrick
O’Toole to vote against Conservative MP’s private bill on ‘sex-selective abortion’

Erin O’Toole said he supports a woman’s right to choose and will personally vote against the private member’s bill

Deputy Prime Minister and Minister of Finance Chrystia Freeland responds to a question during Question Period in the House of Commons Tuesday December 8, 2020 in Ottawa. The stage is set for arguably the most important federal budget in recent memory, as the Liberal government prepares to unveil its plan for Canada’s post-pandemic recovery even as a third wave of COVID-19 rages across the country. THE CANADIAN PRESS/Adrian Wyld
Election reticence expected to temper political battle over federal budget

Opposition parties have laid out their own demands in the weeks leading up to the budget

Each spring, the Okanagan Fest-of-Ale is held in Penticton. This year, as a result of the COVID-19 pandemic, the festival will not be held. However, beer is still available. How much do you know about this beverage? (pxfuel.com)
QUIZ: How much do you really know about beer?

Put your knowledge to the test with this short quiz

Pall Bearers carrying the coffin of the Duke of Edinburgh, followed by the Prince of Wales, left and Princess Anne, right, into St George’s Chapel for his funeral, at Windsor Castle, in Windsor, England, Saturday April 17, 2021. (Danny Lawson/Pool via AP)
Trudeau announces $200K donation to Duke of Edinburgh award as Prince Philip laid to rest

A tribute to the late prince’s ‘remarkable life and his selfless service,’ the Prime Minister said Saturday

A vial of some of the first 500,000 AstraZeneca COVID-19 vaccine doses that Canada secured. THE CANADIAN PRESS/Carlos Osorio
Canada’s 2nd blood clot confirmed in Alberta after AstraZeneca vaccine

The male patient, who is in his 60s, is said to be recovering

The funeral of Britain’s Prince Philip in Windsor, England, on Saturday, April 17, 2021. Philip died April 9 at the age of 99. (Kirsty Wigglesworth/AP)
PHOTOS: Prince Philip laid to rest Saturday as sombre queen sits alone

The entire royal procession and funeral took place out of public view within the grounds of Windsor Castle

Prime Minister Justin Trudeau looks on as Deputy Prime Minister and Finance Minister Chrystia Freeland responds to a question during a news conference on Parliament Hill in Ottawa, Tuesday, Aug. 18, 2020. THE CANADIAN PRESS/Adrian Wyld
Expectations high as Trudeau Liberals get ready to unveil first pandemic budget

The Liberals will look to thread an economic needle with Monday’s budget

Doses of the Moderna COVID‑19 vaccine in a freezer trailer, to be transported to Canada during the COVID-19 pandemic. THE CANADIAN PRESS/Nathan Denette
Pfizer to increase vaccine deliveries in Canada as Moderna supply slashed

Moderna plans to ship 650,000 doses of its vaccine to Canada by the end of the month, instead of the expected 1.2 million

Most Read