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ARTICLE · 18 DECEMBER 2018

Navigating Alberta's Oil Production Curtailment: Operator Considerations

On December 2, the Government of Alberta announced mandatory reductions to oil and bitumen production in an attempt to narrow the price differential received for Alberta oil and bitumen compared to North American benchmark prices.

CanadaEnergy and Natural Resources

On December 2, the Government of Alberta announced mandatory reductions to oil and bitumen production in an attempt to narrow the price differential received for Alberta oil and bitumen compared to North American benchmark prices. This temporary cut to production will commence in January 2019, with an initial decrease of 325,000 barrels per day (b/d) (approximately 8.7% of Alberta's current production). The curtailment will be applied at the operator level, with several dozen operators to be issued curtailment orders to reduce their production.

The Curtailment Rules provide that the minister of energy may "fix the combined amount of crude oil and bitumen that may be produced by each operator." The first 10,000 b/d of an operator's production are exempt from curtailment and operators with less than 10,000 b/d of production of crude oil and bitumen will not be subject to a curtailment order.

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