The Notley government has announced it will be increasing the amount of oil produced in Alberta after just a month of a curtailment plan that saw a decrease in production by 325,000 barrels per day.
The change is because of storage levels in Alberta dropping ahead of schedule. They dropped by about one million barrels per week since the start of the year.
As a result, the NDP government will be increasing production in February and March to 3.63 million barrels per day, up from January’s limit of 3.56 million or an increase of about 75,000 barrels per day.
Notley announced on December 2 that they would be imposing a limit on production in order to address the massive oil surplus that was adding to the oil price differential.
She says her government’s measures are working.
“While it hasn’t been easy, companies big and small have stepped up to help us work through this short-term crisis while we work on longer-term solutions, like our investment in rail and our continued fight for pipelines,” she said in a release.
Officials say there is about 30 million barrels of oil in storage.
Notley says they will continue to modify the production levels in Alberta as necessary throughout the year.
Earlier this month, data from the energy sector indicated that the difference in prices between Western Canadian Select and West Texas Intermediate had dropped to just under $8 USD.
Analysts say the curtailment plan was one of the reasons why the differential dropped so quickly.
At that time, Notley cautioned that there could be a good deal of volatility in the oil industry throughout the year and no one is assuming that a restriction on production is the answer to solve the issue.
Currently, the oil price differential sits at $8.60.
