Calling low oil prices the worst fiscal crisis the province has faced in as many as 50 years, Prentice said if they remain under $50 per barrel for the remainder of the year, the province's revenue from its petroleum sector would be cut by around C$10 billion ($8.44 billion).
The U.S. benchmark oil price settled at $48.36 per barrel on Friday, down from more than $100 in June.
The premier, a one-time federal cabinet minister in Stephen Harper's government and a former investment banker, said the province is being advised to expect oil to average $65 per barrel in the 2015-2016 fiscal year that begins April 1 and $75 for the following fiscal year.
"The effect of those prices are that in (2015-2016) we will need to deal with a C$6.7 billion revenue shortfall and in the subsequent year it will be in the vicinity of $5 billion," Prentice told reporters. "The year after that we should be back towards balanced budgets."
Alberta is Canada's wealthiest province, but it relies on royalties and payments from its oil and gas sector to fund nearly a third of its government revenue. With prices low, producers have cut back on spending and cut jobs, with Royal Dutch Shell Plc saying on Friday it would cut 5 to 10 percent of workers at its oil sands mining operation in the province.
Prentice said the government will cut its own expenditures and infrastructure projects in the fast-growing province of 4 million are being reviewed on a case-by-case basis.
"We need to judge how, and to what extent, it's appropriate to have deficits over the next three years," he said.
(Reporting by Scott Haggett; Editing by Leslie Adler)
