Alberta’s government sees production curtailment exemptions possible

CALGARY (Bloomberg) - Alberta Premier Jason Kenney says it’s likely his government will allow oil producers to exceed their provincially imposed output caps if they can ship those extra barrels by rail.

Energy Minister Sonya Savage is in “very serious discussions” with producers this week on the idea of exempting incremental rail shipments from curtailment, and the plan is tied to the province’s sale of crude-by-rail contracts that were signed by the previous government, Kenney said in an interview in Bloomberg’s office in New York. The province is making progress on the crude-by-rail sale, which has attracted 16 bids, he said.

“If we can find a way out on that, we think can very likely find a way forward to exempting incremental crude by rail from curtailment through special production allowances,” Kenney said Monday.

Under the right circumstances, Alberta oil producers could be shipping more than 300,000 bbl of crude by rail a day, up from the current roughly 150,000 bpd, he said. The province’s crude-by-rail shipping capacity is about 500,000 bpd, he said.

Alberta last year introduced a curtailment policy as a supply glut, created by transportation constraints, depressed Canadian oil prices. Suncor Energy Inc., Canadian Natural Resources Ltd., Imperial Oil Ltd. and Cenovus Energy Inc. are the province’s top oil producers by volume.