& Tobago

Very usefull links


News links




Dow Jones

Oil price



Views and News




Canada continue oil-output reduce as Alberta cuts extended on pipeline delay

Andrew Burton / Bloomberg

The curtailment program was drawn up last year after the pipeline pinch sent Canadian heavy crude tumbling
to a record low, below $14 a barrel.

- Alberta doubles curtailment exemption to 20,000 barrels a day
- Province sees production exceeding takeaway by 150,000 barrels

By Kevin Orland / Bloomberg

Petroleumworld 08 22 2019

Canada's oil-rich province of Alberta is extending its output cuts by a year as delays to key pipelines threaten to prolong a glut of crude in the region.

The curtailment program, which will now end in December 2020, had been slated to wrap up at the end of this year as Enbridge Inc.'s expansion of the Line 3 pipeline began moving oil. But that project was set back by a year because of permitting delays in Minnesota, leaving the province's drillers churning out more oil than they could ship to refineries. TC Energy Corp.'s planned Keystone XL line and the Canadian government's expansion of the Trans Mountain conduit also have been bogged down by legal challenges.

Alberta's delay in ending the curtailment program may help support oil prices, as U.S. Midwest and Gulf Coast refiners face the prospect of constrained shipments of Canadian heavy crude at the same time that they're getting reduced supplies from Mexico and Venezuela. The policy is a mixed bag for Canadian drillers, who are benefiting from the higher prices but frustrated by their inability to expand output.

“This is a short-term solution, and it is the last thing we want to be doing,” Alberta Energy Minister Sonya Savage said during a news conference. “We're doing it because it's essential.”

Ending the program too early could cause a collapse in Western Canadian Select crude prices, hurting producers and reducing the value of royalties paid to the province, she said. Alberta could still end the curtailment before December 2020, but will need to do so in an orderly fashion, she said.

Without curtailment, the province estimates that production would exceed takeaway capacity by about 150,000 barrels a day.

The extension won applause from Cenovus Energy Inc. , a major oil-sands producer that was among the most vocal supporters of the curtailment plan last year.

“We're pleased that the province has taken steps to provide further market stability by extending the curtailment program until there is greater certainty regarding increased pipeline capacity,” Al Reid, the company's executive vice president for stakeholder engagement, said in an emailed statement.

Some producers, like Suncor Energy Inc. , criticized the program because their refining business was benefiting from lower crude prices and they weren't as affected as others by the pipeline crunch.

Crude by Rail

To be sure, the production limits had already been raised throughout the year as more rail-shipping capacity has come online and pipeline operators expanded the volume that can go through their lines with improvements to pump stations or the addition of drag-reducing agents. The provincial production limit for October will be about 3.79 million barrels a day, up from 3.56 million in January.

The province also said on Tuesday that it's raising the amount of a producer's output that's exempt from curtailment to 20,000 barrels a day from 10,000. That change, which takes effect in October, will shrink the number of producers affected by curtailment to 16, from 29 previously. The province has about 300 producers in total.

The curtailment program was drawn up last year after the pipeline pinch sent Canadian heavy crude tumbling to a record low, below $14 a barrel. Even before the system went into effect in January, the prospect of the production cuts sent prices surging. Since peaking above $56 in early-April, the heavy blend has lost roughly 23% to about $43 on Tuesday.

Before the recent price slide, curtailment had the unintended effect of making Canadian oil too expensive for refiners to receive via more-costly rail shipping, which for much of the year has kept storage levels in Alberta high. Those inventories finally started to shrink over the summer, with stockpiles dropping to about 46% of Alberta's storage capacity in the three weeks through July 26, according to Genscape. That's the lowest since November 2017.

Higher Limits

Canadian producers including Suncor and Cenovus had been asking Alberta's government to allow them to raise their limits if they can ensure that the additional production would be moving by rail and not taking up scarce pipeline space.

The province still is considering that proposal, and it's also in the process of divesting 120,000 barrels of daily rail-shipping capacity that was purchased by the previous Alberta government to private-sector companies, Savage said.

An eventual end to the curtailment program depends on when Enbridge's Line 3 expansion is completed, said Kevin Birn, IHS Markit's director of North American crude oil markets. Keystone XL and the Trans Mountain expansion won't begin shipping until late 2021 or 2022, meaning they'll provide little immediate relief for producers, he said.

“The underlying issues issues that led to the differential blowout, and ultimately to curtailment, remain unresolved,” Birn said in an interview.“That's what underpins all of the government's decisions.”

Story by Kevin Orland from Bloomberg. / 08 21 2019


We invite you to join us as a sponsor.Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories.


Copyright© 1999-2019 Petroleumworld or respective author or news agency. All rights reserved.

We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions as the source.

Other stories you have to get authorization by its authors. Internet web links to are appreciated.

Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!

We invite all our readers to share with us
their views and comments about this article.

Write to

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to:

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1



Editor & Publisher: Elio Ohep/
Contact Email:

CopyRight © 1999-2019, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2019, Petroleumworld ™  / Elio Ohep - All rights reserved
This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.