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Alberta to ease the mandatory reduction in oil production



The Canadian province of Alberta will facilitate the reduction of oil in February and March, earlier than expected, on Wednesday declaring that its rare step in limiting production has reduced the production of crude oil.

Alberta's move to reduce its limitations came to an end at the end of the month when Canadian prices improved significantly, but manufacturers were disproportionately affected.

US refiners are also coded to find a substitute for Venezuelan heavy crude oil – just like Alberta produces – for US sanctions on a country's state-owned oil company.

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Alberta oil prices fell in October to record downward trends compared to US futures, due to overloaded pipelines supporting untreated storage tanks and causing constraints.

"We are not yet a forest, but this temporary measure works," said Prime Minister Rachel Notley.

The province indicated that in February and March the output would be set at 3.63 million barrels per day (bpd), an increase of 75,000 bpd from January.

Storage levels have fallen by 5 million barrels to 30 million barrels, as restrictions were announced in December that were faster than expected, the provincial government said. This month they have fallen by about 1 million barrels per week.

Oil cuts prevented a disaster for many small producers who, in some cases, sold crude oil at a cost.

But they have split the major manufacturers rapidly, illustrating the dirty task of the face of the government. Producers who do not belong to recycling plants, such as Cenovus Energy Inc. and Canada's Natural Resources Ltd, forced Alberts to impose restrictions last year.

Those with recycling capacity – Suncor Energy Inc, Husky Energy Inc and Imperial Oil Ltd – benefited from cheap oil exploitation through their refineries and opposed the measure.

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There have also been unintended negative consequences. In a letter dated 22 January, Canadian Natural Resources told service providers that at the end of December, Alberta changed the way it calculated that per-generation production allowed a greater reduction in production than others.

Restrictions do not apply to small businesses that produce less than 10,000 bpd.

Reducing restrictions can encourage oil producers to sign contracts to send more crude oil, Greg Pardy, analyst at RBC Dominion Securities.


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