(Reuters) - Canada’s main oil-producing province of Alberta will lift curbs on crude production ahead of schedule at the start of December, as coronavirus-related shutdowns ease pipeline congestion, Energy Minister Sonya Savage said on Friday.
The move comes a month ahead of when the restrictions were set to end and at a time when the provincial economy is reeling under the impact of the pandemic.
Nearly 16% of the crude production in the province, home to the world’s third-largest oil reserves, is currently offline, Savage said.
“Maintaining the stability and predictability of Alberta’s resource sector is vital for investor confidence as we navigate the economic conditions brought on by the pandemic, the commodity price crisis and the need for pipelines,” she said in a statement.
Alberta’s previous New Democratic Party government imposed production limits last year to drain a glut of oil in storage that built up due to congested pipelines.
Premier Jason Kenney’s United Conservative Party government has since then steadily eased curtailments as inventories drained.
The curbs were set to expire on Dec. 31 but production had been coming in “well below” provincial limits, Eight Capital analyst Phil Skolnick said in a note. He forecast little change in Western Canada Select heavy crude oil prices.
Oil was headed for a weekly drop as demand concerns raised by surging coronavirus cases overshadowed the prospect of an extension to OPEC-led supply curbs.
Savage said on Friday that while the provincial government will extend its regulatory authority to curtail production through December 2021, it will not set production limits.
The province’s oil output dropped by as much as 880,000 barrels a day, or 22%, at the peak of the production cuts in response to lower global fuel consumption, Savage had said last week.
Reporting by Shradha Singh in Bengaluru; additional reporting by Jeff Lewis in Toronto; Editing by Arun Koyyur and Alistair Bell
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