The government of the Canadian province of Alberta has allowed all producers to drill new conventional oil wells without being restricted by production limits; production caps will remain in effect for existing producing wells. Mandatory production curbs were introduced for oil wells in January 2019, in an attempt to maintain production within the limits of the transport capacity of congested oil export pipelines. The curtailment measure was expected to reduce oil stocks and narrow price discounts. The initial cap of 3.56 mb/d will be increased to 3.81 mb/d in December 2019.
The Alberta government expects this softening in oil production caps to improve the investment climate and to boost investments in the province's oil and gas sector, which has been deterred by the curtailment policies and by difficulties in building new pipelines projects. In the winter 2019, drilling activity in Canada was about 30% lower than over the same period of 2018. According to the Alberta Energy Regulator, conventional crude oil only accounts for 16% of Alberta's total oil production, which is dominated by oil sands production. The measure may incite Canadian Natural Resources, the largest conventional oil producer, to increase drilling, but it might prove insufficient to increase oil supplies.
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