Put oil 'crisis' on first ministers' agenda: Alberta, Saskatchewan premiers

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The meeting was called to hash out legal directives to give the Alberta Energy Regulator the power to direct oil producers to cut production by 8.7 per cent starting January 1.

Alberta Premier Rachel Notley announced Sunday the province will require producers with more than 10,000 barrels per day of output to cut production by about 8.7 per cent until there is enough shipping space on pipelines to improve prices, expected to take three months.

The price discount between Western Canadian Select (WCS) and West Texas Intermediate (WTI) has fluctuated in recent weeks, reaching around C$45 a barrel.

Oil prices have been sagging, with USA crude recently dipping to near $50 a barrel on renewed oversupply fears.

The Alberta government hopes to roughly cut in half the 35 million barrels of oil now sitting in storage across the province - a reduction that analysts said could be achieved in a matter of months.

Kenney said that not all of Saskatchewan's oil production would be affected. "Ottawa's failure in this area has left Alberta's energy producers with few options to move their products, resulting in serious risks for the energy industry and Alberta jobs", the Alberta Premier's office said.

"What we now have is a serious glut in oil, which can't be resolved until OPEC gets together on Thursday and decides to cut back along with Russian Federation and a few other producing nations".

The Canadian Dollar rose broadly Monday as oil prices recovered from 2018 lows but developments in the domestic market have just dented the growth outlook and could have negative consequences for the currency over the coming months.

The Saskatchewan government will not be following Alberta's lead when it comes to cutting oil production in the face of plummeting prices.

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The mandated cut ends on December 31, 2019.

There will be an exemption for the first 10,000 barrels of oil produced, a measure that is meant to protect some smaller companies working in the province. Indeed, it soon became clear to anyone listening thanks to a reporter's question that the Opposition UCP had demanded even deeper production cuts.

"As proposed, the meeting agenda does not include any discussion on the crisis facing the energy industry and the price differential that is crippling the Alberta, Saskatchewan and Canadian economies".

Crude production in Alberta's oil sands is expanding faster than pipeline capacity, creating a bottleneck and a buildup of product in storage. The government estimates Alberta is losing $80 million a day due to the discount. "This is a short term measure", Notley said.

Canada's federal government had been attempting for some time to build a new pipeline called "Trans Mountain" that it claimed would enable the nation to export more oil to worldwide markets, instead of sending all of it to the U.S.

Opposed to the cuts, Suncor says authorities should let the market regulate itself.

Above: Price of Central Alberta blend of oil.

The reduction will drop to an average of 95,000 barrels a day until curtailment ends at the end of 2019, when Enbridge's new Line 3 starts operating.

However, he says we should turn our eyes to the world stage. That's on top of mounting concern that the country's regulatory framework makes it very hard to get much-needed pipeline projects approved.

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