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Alberta is eyeing royalty breaks on future production to spur supply cuts in the province’s oil industry as Premier Rachel Notley tries to reduce a glut of crude that has swamped markets and sent prices plunging.

Alberta is weighing incentives and credits – including the prospect of a royalty holiday – to get producers to reduce output against a proposal from parts of the industry to impose across-the-board production cuts, said a person familiar with the deliberations. The Globe and Mail granted anonymity to the person because they are not authorized to speak publicly about the private discussions.

Alberta’s heavy crude prices have dropped faster and farther than falling U.S. and global oil prices in recent weeks, squeezing profits of some of the sector’s biggest players and forcing others to curtail production.

Read more: Why Alberta’s latest oil-price plunge is unprecedented

Prices for extra-heavy crude have plunged due to acute pipeline constraints.

This has prompted calls for relief from an industry and province that have long touted their free-market credentials. Ms. Notley has appointed three experts to consult with industry executives on ways to help solve a problem she says is costing the Canadian economy $80-million each day.

A spokeswoman for Ms. Notley declined comment on Tuesday.

The prospect of a mandated supply cut has opened a deep rift in the industry. Major producers such as Cenovus Energy Inc. and Canadian Natural Resources Ltd. have urged the government to step in to address what they insist is a market failure.

But big rivals such as Imperial Oil Ltd., Suncor Energy Inc. and Husky Energy Inc. oppose intervention because their refining operations benefit from cheap crude. They have warned that such a move could provoke a backlash from the United States.

This fall, the price gap between Alberta’s heavy oil and the U.S. benchmark oil price topped a record US$50 a barrel. Prices have improved somewhat, but the discount is still double levels typically seen by the industry, sapping revenue ahead of what is normally the busy winter drilling season. Oil sands barrels for future delivery fetched about US$17.81 in Tuesday trading, according to Calgary oil broker Net Energy Exchange.

The Alberta Premier is scheduled to address the Canadian Club, a forum for high-profile speakers, on Wednesday in Ottawa. She has asked the federal Liberals to subsidize costs of purchasing rail cars to transport the province’s crude under a plan estimated to cost about $3-billion.

In Alberta, United Conservative Party Leader Jason Kenney is scheduled to address possible government responses to the industry’s problems at a news conference on Wednesday.

Ottawa has so far balked at acquiring trains to ease the glut of crude. In Calgary Tuesday, Finance Minister Bill Morneau sought to deflect criticism that the Liberals aren’t doing enough to address the province’s woes, saying he understands that low oil prices are a national concern.

Sandip Lalli, the president of the Calgary Chamber of Commerce, questioned whether Alberta’s concerns are resonating beyond the province, especially in Ottawa. “There’s a political disconnect,” she said.

“The message from the federal government is that it’s all about Alberta when they’re in Alberta, but when they aren’t in Alberta, I’ve never heard them say that $80-million is lost daily from the economy due to the current price of oil. That’s over $3-million an hour and that isn’t translating across the country,” she said.

Elizabeth Cannon, president of the University of Calgary, commented on the speed with which Ottawa responded to the news Monday that about 3,000 jobs will be lost when General Motors closes a plant in Oshawa, Ont., compared with the federal response to more than 100,000 job losses in Calgary’s energy sector through the downturn since 2014.

“There is not a week that goes by when we don’t think of what we can do to improve the situation,” Mr. Morneau said in response to Ms. Cannon.

Ottawa purchased the Trans Mountain pipeline for $4.5-billion and has plans to expand the conduit to carry nearly three times more oil from Edmonton to Vancouver for export. However, Mr. Morneau could not say when construction on the expansion would start.

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