Alberta Premier Rachel Notley is ordering a mandatory cut in oil production to deal with a price crisis that is costing Canada an estimated $80 million a day.
Notley says as of January there will be an 8.7 per cent reduction ordered in oil production.
Production of raw crude oil and bitumen will be reduced by 325,000 barrels per day.
That figure is expected to shrink as the glut of oil in storage is reduced.
The mandated cut ends on Dec. 31, 2019.
Notley says the action is necessary to reverse the widening price differential that she says could cause further harm to Alberta’s economy if not addressed immediately.
Alberta’s oil is selling a markedly lower rates compared with the North American benchmark, due in part to oil pipeline bottlenecks.
The announcement is expected to narrow the differential by at least $4 per barrel and add an estimated $1.1 billion to government revenues in 2019-2020.
“Every Albertan owns the energy resources in the ground and we have a duty to defend those resources,” said Notley. “But right now they’re being sold for pennies on the dollar.
“We must act immediately.”
