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Alberta Premier Jason Kenney, seen here on Feb. 24, 2020, said he’s bringing an urgent message to the federal Liberals this week: The global economic slump will hit his oil-focused province even harder than other parts of the country.

JASON FRANSON/The Canadian Press

Alberta’s Premier says layoffs will hit his province’s energy sector in the weeks ahead, and some already-stressed companies won’t survive the oil-price drop brought on by the novel coronavirus and a market-share battle initiated by Saudi Arabia and Russia.

Jason Kenney said he’s bringing an urgent message to the federal Liberals this week: The global economic slump will hit his oil-focused province even harder than other parts of the country. He will ask Ottawa to take the predicament faced by the country’s energy sector as seriously as the global financial crisis in 2008.

“We need the government of Canada to have our back,” Mr. Kenney said, speaking to reporters at the Calgary airport Wednesday before heading to Ottawa for a first ministers meeting on Thursday and Friday. He will also have a private discussion with Deputy Prime Minister Chrystia Freeland.

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Global oil prices saw their most dramatic drop in almost three decades this week, with some predicting that key benchmarks could sink further still as the economic effects of both COVID-19 and a market-share battle between powerful oil producers continue to spread.

The Alberta Premier said oil is Canada’s largest export, and his concerns are not regional in nature. In the past two days, Canadian oil and gas producers MEG Energy Corp., Seven Generations Energy Ltd., and Cenovus Energy Inc. announced cuts to 2020 spending. Mr. Kenney said he expects other companies to follow suit, and also cut jobs in the next two to three weeks. He will be pressing the need for emergency support for those workers with the federal government.

Canadian companies – hampered in recent years by pipeline capacity constraints and lower oil prices – have cut operating costs and worked to pay down debt, he said. But many are still fragile.

“A lot of them cannot cut operating costs any further. And they cannot raise equity.” One of the things Ottawa could do is work with lenders “to extend some runway to some of these companies to get through the price downturn," Mr. Kenney said.

Low-priced oil means there’s much less incentive for producers to ship crude by rail. It is a more expensive form of transport, compared to pipelines, that Canadian oil producers have increasingly relied on in recent years.

But Mr. Kenney said Wednesday he expects crude-by-rail shipments will plummet. And with that drop in rail transport, there’s an increased risk that the differential – or the discount applied to Canadian heavy oil – could jump. “Then it’s a complete disaster."

His government could impose further restrictions on production to help sustain prices for Canadian producers, he said. “We will use the curtailment tool responsibly to ensure at least a survival price for our producers to get through this period.”

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From Ottawa, he’s also asking that policies likely to create additional strain for the industry – such as the yet-to-be-released Clean Fuel Standard, which would demand lower carbon intensity over the life cycle of fuels – be sidelined. And Mr. Kenney wants Ottawa to quickly come to terms on an equivalency agreement for methane regulations.

Mr. Kenney said his own government is examining a number of measures it could take to address the financial fallout. The province itself could inject liquidity into Alberta-based energy companies, he said.

Ever a political adversary to the federal Liberals, Mr. Kenney added Ottawa needs to get “refocused” on the economy. “Enough about dealing with every fashionable issue out there, and the virtue-signalling, and the UN Security Council, and all the rest of it. We are facing an economic crisis in Canada and we need the national government to act accordingly.”

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