Western Canadian Select's discount to WTI expanded to US$50 a barrel last month, the widest spread in more than a decade, amid pipeline bottlenecks and reduced demand from USA refineries undergoing maintenance.
Notley said it will be a short-term solution created to be monitored and adjusted monthly as necessary.
Notley said the 8.7 per cent reduction begins in January, with the expectation that figure will gradually decrease until the cuts are scheduled to end on December 31, 2019.
She announced last week that her government will purchase rail cars to get more oil moving while the province waits for the Enbridge Line 3 and the Trans Mountain expansion to the B.C. coast to come on line. Imperial Oil CEO Rich Kruger said the government thus "introduced a new risk", while Husky Energy spokesman Mel Duvall warned the mandatory reduction might have "serious negative investment, economic and trade consequences", according to local media. While curtailments have been used before by previous governments, we believe they should only be used for a short period of time, and only in extreme cases.
The government is buying railcars to increase shipments to offshore markets by 120,000 barrels per day before the end of 2019 in order to get around the "transportation bottlenecks" that have crippled the Canadian oil market in 2018.
"It's about time the provincial government did something", he said. That's more than the production of three of the 15 members of the Organization of Petroleum Exporting Countries (Equatorial Guinea, Gabon and the Republic of Congo) and almost a fifth the size of the cuts OPEC and its allies agreed to almost two years ago.
The first 10,000 bpd for each company will be excluded, said the province.
Canadian condensate demand is about 650,000 barrels a day, of which 350,000 bpd is produced domestically with the rest imported from the United States.
The cuts will affect about 25 larger bitumen and conventional producers in Alberta.
Alberta Party Leader Stephen Mandel said the government was warned in the spring that this crisis was coming, and should have acted sooner. The move also found support among her political rivals.
"Even before these revisions our forecasts were below consensus for Canadian GDP based in part on the dampening effects of slower global growth on the oil patch and other sectors", says Shenfeld.
Notley, who appointed three envoys tasked with examining short-term solutions, was in Ottawa and Toronto where she slammed the federal government for failing to take action.
The perceived federal inaction has been a source of frustration for Albertans.
"The status quo can not continue", he said in a statement.
That project, too, has been tied up in the courts.
The glut in reserves driving down prices needs to be addressed before producers begin taking more drastic steps such as slashing capital projects or laying off workers, Notley said.
Canada's main stock index began the week higher as Alberta production cuts helped to lift oil prices to their largest gain since June, while investors felt relief from a preliminary trade truce between the USA and China.