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Oil producers call for oil curtailment easing in return for rail commitments

Suncor's base plant with upgraders in the oil sands in Fort McMurray Alta, on Monday June 13, 2017. Canada's oilsands industry, hard hit by a price storm earlier this year blamed on tight pipeline capacity out of Western Canada, is sailing towards a pricing typhoon stirred up by new fuel standards for the international shipping industry. THE CANADIAN PRESS/Jason Franson

Canada’s largest oil producers are calling on the Alberta government to reward companies that commit to adding crude-by-rail capacity by easing their oil curtailment levels.

Suncor Energy CEO Mark Little says the proposal makes a lot of sense because it would allow crude oil export capacity to increase at the same time that barrels are being produced to fill that capacity.

He says the result would be that Alberta producers would be able to get better prices for higher volumes of oil.

Alberta enacted a program to reduce oil exports starting in January after discounts on Western Canadian Select bitumen-blend crude soared to as much as US$50 per barrel compared with U.S. benchmark West Texas Intermediate prices.

The situation was blamed on the inability of pipeline capacity to keep up with growing output from the oilsands.

The curtailment program was to gradually be reduced and end by late 2019, but Alberta Premier Jason Kenney has said it may need to continue for longer if storage levels in the province remain high.