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

Loki’s Car Club hosting its first annual holiday toy drive. File photo.
Loki’s Car Club hosting its first annual holiday toy drive

Local Wetaskiwin businesses set up as toy drive drop off locations.

SARS-CoV-2 virus particles, which causes COVID-19, emerge from the surface of cells isolated from a patient in the U.S. and cultured in a lab in a 2020 electron microscope image. THE CANADIAN PRESS/AP-HO, National Institute of Allergy and Infectious Diseases - Rocky Mountain Laboratories
Alberta now has 17,743 active cases of COVID-19

Province now has 17,743 active cases

A home on Montana First Nation was damaged by fire in the early hours on Dec. 2, 2020. (Chevi Rabbit/Submitted)
House fires on Montana Cree Nation under investigation

Two separate fires took place in the early hours of Dec. 2

File photo
City of Wetaskiwin launches Whistle-blower Program

Whistle-blower program acts as anonymous forum to hold local government accountable

Ten-month-old Aidan Deschamps poses for a photo with his parents Amanda Sully and Adam Deschamps in this undated handout photo. Ten-month-old Aidan Deschamps was the first baby in Canada to be diagnosed with spinal muscular atrophy through Ontario’s newborn screening program. The test was added to the program six days before he was born. THE CANADIAN PRESS/HO, Children’s Hospital Eastern Ontario *MANDATORY CREDIT*
First newborn tested for spinal muscular atrophy in Canada hits new milestones

‘If Aidan had been born any earlier or anywhere else our story would be quite different’

People line up at a COVID-19 assessment centre during the COVID-19 pandemic in Scarborough, Ont., on Wednesday, December 2, 2020. Toronto and Peel region continue to be in lockdown. THE CANADIAN PRESS/Nathan Denette
COVID-19 vaccine approval could be days away as pressures mount on health-care system

Many health officials in regions across the country have reported increasing pressures on hospitals

File Photo
Sylvan Lake Town Council squashes mask bylaw

The bylaw did not make it past first reading, after a 4-3 vote defeated the motion

A logo for Netflix on a remote control is seen in Portland, Ore.,Aug. 13, 2020. Experts in taxation and media say a plan announced Monday by the government will ultimately add to the cost of digital services and goods sold by foreign companies. THE CANADIAN PRESS/AP-Jenny Kane
‘Netflix tax’ for digital media likely to raise prices for consumers, experts say

The government says Canadian companies already collect those taxes when they make digital sales

Gaming content was big on YouTube in 2020. (Black Press Media files)
What did Canadians watch on Youtube during isolation? Workouts, bird feeders

Whether it was getting fit or ‘speaking moistly,’ Canadians had time to spare this year

A teacher places the finishing touches on the welcome sign at Hunter’s Glen Junior Public School which is part of the Toronto District School Board (TDSB) during the COVID-19 pandemic in Scarborough, Ont., on Sept. 14, 2020. THE CANADIAN PRESS/Nathan Denette
Hindsight 2020: How do you preserve a year many Canadians would rather forget?

Figuring out how to preserve the story of the pandemic poses a series of challenges

Team Manitoba celebrate after defeating Team Ontario to win the Scotties Tournament of Hearts in Moose Jaw, Sask., Sunday, Feb. 23, 2020. Curling Canada wants Calgary’s Canada Olympic Park to be a curling hub for the season’s top events. THE CANADIAN PRESS/Jonathan Hayward
Calgary facility set to become curling hub during pandemic

Curling Canada has provisional approval for Calgary’s hub-city concept from Alberta Health

Most Read