BILLINGS, Mont. - A national gathering of oil and gas producers heard Monday that steep discounts on regional oil prices are narrowing, and they got a broad overview of oil pipeline capacity in the next three to 10 years.

The need to move regional oil production is contingent on the diffusion of Canadian crude to more in Canada and the United States and a commitment from oil refiners to buy regional crude, speakers at the Interstate Oil and Gas Compact Commission meeting said.

The three-day, midyear issues summit of the commission opened Sunday at the Sheraton Hotel in downtown Billings and continues through today.

The limited capacity of pipelines and refineries in the United States was exacerbated earlier this year by larger amounts of Canadian crude moving out of the Alberta tar sands into the United States and reduced refining operations because of yearly maintenance and a fire at a refinery in Denver.

A few months ago, the oil being produced in Montana, Wyoming and North Dakota was being hit with discounts of up to $35 a barrel off the standard West Texas Intermediate price of $60.

That differential has narrowed to $12 to $14 a barrel, said Bryan Hassler, executive director of the Wyoming Pipeline Authority. Wyoming sweet crude is bringing $50 to $51 a barrel now, compared with $65 for West Texas Intermediate.

Tom Richmond, executive director of the Montana Oil and Gas Commission, said similar pricing is now at play in Montana.

The heavy discounting of oil produced in the three-state region has been galling to producers and governors of the only region of the country that has increased oil production at a time when international spot prices for oil have touched $75 a barrel.

Hassler said the reactivation of the Suncor refinery in Denver, which uses 60,000 barrels a day, lower inventories of crude and an end to the yearly maintenance turnarounds at refineries, has improved the price for regional producers.

Some have suggested that rail transportation is part of the solution to full oil pipelines, but Hassler said railroads are short on tanker cars and the cost would run about $5 a barrel to ship by rail.

Hassler said producers need to get to a common solution quickly.

That requires long-term commitments to filling the pipelines being proposed. That means support for continued Canadian imports to anchor those pipelines and support by refiners to buy regional crude, he said.

Because of the tremendous cost of pipelines, companies building them need that long-term commitment from Canada.

Trying to meet that pipeline demand is Enbridge Energy of Houston, said Denise Hamsher, director for public, governmental and regulatory affairs for Enbridge.

She emphasized that her company is in the transportation business only.

"We don't produce, we don't refine," she said. "We transport for a fee, which is federally regulated."

The company has $14 billion of proposed projects over the next decade, she said.

Part of the strategy is to give Canadian crude someplace to go, which would free up some pipeline capacity in Montana and the region, she said. On the drawing boards are pipelines to British Columbia making Alberta oil available to the West Coast and Asia and to Wisconsin and other Midwest states.

U.S. pipelines are regulated by the Federal Energy Regulatory Commission as common carriers, and they are responsible for moving everyone's oil. Some preference is given to long-term customers ahead of new customers.