OTTAWA—Canada’s Liberal government is trying to minimize the economic and political fallout from depressed western Canadian crude oil prices, and its latest bid is a financial package for the country’s struggling energy sector.

A package of financing and incentives totaling 1.6 billion Canadian dollars ($1.20 billion) emerges at a time of deep discontent in western Canada, from political leaders and residents, over the federal government’s failure to get new pipeline infrastructure built. The lack of pipeline capacity to carry...