Alberta to ease production limits on oil if it's shipped by rail

The Canadian province of Alberta will ease oil production limits on energy companies if they move the additional oil on trains, provincial government officials announced yesterday.

The announcement was made after industry representatives proposed shipping more crude by rail in exchange for curtailment relief.

Many oil producers are capable of producing more oil that their curtailment limits permit, and the government's announcement will enable operators to use all available rail capacity in the province, Alberta officials said in a press release.

"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. Pipeline delays ultimately have constrained market access and dampened investment in our oil sector," said Alberta Minister of Energy Sonya Savage. "This program will lead to more production and increased investment, benefiting industry, our province’s bottom line, and, ultimately, Alberta taxpayers.”

The government will work with industry to set the production allowance baseline, which will be based off operators' first-quarter 2019 average rail shipment, Alberta officials said.

The special production allowance will start with December production.