EDMONTON—Opposition leader Jason Kenney is calling for the provincial government to enforce a 10 per cent production curtailment in Alberta to deal with the ongoing oil price differential.

The United Conservative Party leader said at a news conference Wednesday he doesn’t take the decision lightly, but after having consulted industry experts, it needs to be done.

“I believe government intervention in markets should generally be avoided,” Kenney said.

“Which is why I was initially opposed to the idea of mandatory curtailment when it was first floated a few weeks ago.”

Premier Rachel Notley also raised the alarm on the oil differential earlier in November when she appointed three expert envoys to find a solution.

At the time, Western Canadian Select was selling at around US$45 a barrel less than Texas crude, causing a hit to the economy of about $80 million a day.

Kenney said as of Wednesday, Alberta oil was selling at about $12 per barrel, about $40 less than Texas crude. He also said the curtailment won’t eliminate the $40 differential — just bring it down to around $20. Ultimately, pipelines to the coast are what’s needed, he said.

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To help illustrate his point at the news conference, Kenney stood next to a clear container of Alberta oil with a label that read: 1L Alberta Oil 10 cents. Next to it was a bottle of water with a label, too: 1L Bottle of Water $2.89.

“Our oil is worth about 10 cents a litre, a fraction of the cost of a bottle of water,” Kenney said.

Meanwhile, Kenney said the energy leaders he has met with recently told him the industry is facing layoffs and that they’re losing money.

Kenney’s plan, being drawn up for introduction into the legislature, includes amending the Mines and Minerals Act “to define crude bitumen as petroleum.”

Kenney wants to see oil production curtailed by 400,000 barrels per day, which is around 10 per cent of total production. This would have the effect of reducing the province’s 35 million barrel surplus to about 17 million in a matter of weeks, according to Kenney’s proposal.

Smaller companies producing 25,000 barrels or less would be exempt, the limit would be temporary in order to cut down the surplus and up the price of oil, and there would be a sunset clause for a year from when the curtailment comes down.

Kenney said he wants enforced curtailment because while some producers have voluntarily stalled their production, some refused. He had previously called for voluntary curtailment by industry and stopped short of government enforcement.

However, Kenney blames the differential on the federal government over how the quashing of the Trans Mountain pipeline expansion was handled, as well as Bill C-69, which sees the National Energy Board dissolved and a new Impact Assessment Agency introduced.

The agency changes how new energy projects are reviewed, but Kenney calls C-69 the “no more pipelines bill.” Recently, Notley sent Environment Minister Shannon Phillips to Ottawa to ask the federal government to make changes to the bill.

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Kenney, a self-proclaimed free market conservative leader and whose party is expected to mount the strongest challenge to the NDP in the 2019 election, said his proposal wasn’t a political ploy to make his caucus look good leading up to the campaign.

He said he wanted to “thank the premier,” who arranged through Energy Minister Marg McCuaig-Boyd for him to speak with the three appointed envoys. He said they had a respectful and factual conversation on the issue and he presented his plan to them.

“If the government agrees with, generally, this course of action ... they may vary from us on certain details, and that’s fine,” Kenney said.

“We want to avoid this becoming a political football.”

Kenney said he would be willing to prolong the current sitting of the legislature to ensure the amendment was passed before the house lets up in December.

McCuaig-Boyd spoke to reporters following Kenney’s announcement and said she found it interesting that “last week he was saying, let the free market take its course.”

“Part way through the week he said, ‘Well, maybe voluntary curtailment.’ Now today, he’s saying this.”

The minister said her government’s team of experts is speaking with industry and she said leaders there are “quite divided on the curtailment issue.”

However, she said her government is “looking at all options right now. We have not closed the doors on any good ideas.”

McCuaig-Boyd said curtailment might work as a short-term solution, but she brought up the premier’s announcement from Ottawa on Wednesday that her government would be investing in rail cars to move 120,000 barrels per day, and suggested that was a good medium-term solution.

The plan, currently under negotiation, would start in late 2019 and bring down the differential by about $4 per barrel, the government said in a news release.

Kenney didn’t want to discuss rail cars, saying he needed to assess the details of the plan. He said that what he’s hearing from industry is that they don’t have a year to wait for rail cars.

“We’re going to have a lot of companies that don’t make it a year (or) six months from now,” he said. “I’ve met industry leaders who are talking in the range, collectively, that there could be tens of thousands of layoffs in the first quarter of 2019.”

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