Alberta to ease oil curtailment by 25,000 barrels per day in August

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Notley set up the rail program to help alleviate a glut caused by too much oil and not enough export pipelines, a situation that caused Canadian oil prices to collapse past year and prompted the government to impose mandatory production limits on large crude producers.

The province says it is setting a production limit in August of 3.74 million bpd, versus the initial January limit of 3.56 million bpd.

It cited growing crude-by-rail capacity, declining oil inventory levels and improved efficiencies in export pipelines for the move.

Canada holds the world's third-largest crude reserves, the vast majority of which are in northern Alberta's oilsands.

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The Canadian government last week approved an expansion of the Trans Mountain pipeline, which runs from Alberta's oil sands to British Columbia's coast, but it is not expected to be in service before 2022 at the earliest.

In the interim, Canadian producers are increasingly relying on rail to ship crude to market. While the move helped boost prices, moving the crude-by-rail scheme out of government hands was one of the promises made by the United Conservative Party, which defeated the New Democrats in an April election.

"We have said from the beginning that shipping crude by rail is something that the private sector is in the best position to be doing itself", Energy Minister Sonya Savage said Thursday. Her government said the program would have netted C$2.2 billion by generating C$5.9 billion from sales and increased royalty and tax revenue.

"Our government is taking the next step in shifting the former government's crude-by-rail program to the private sector".

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