Can Alberta double its oil production?

Alberta Premier Danielle Smith is repeating her ambition to double the province’s oil and natural gas production. Is this goal achievable and what would be the consequences? Elements of response.

How many barrels does that represent?

Doubling Alberta’s current oil production would produce about 8.5 million barrels per day. For Canada, we would be around 10 million barrels per day.

Such a volume would place the country neck and neck with Saudi Arabia and not far from Russia.

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Technically, the province has the necessary reserves for this increased production. According to the Energy Regulatory Agency (AER), 159 billion barrels of oil are still in the ground, the vast majority in the tar sands. That’s enough for over 50 years of increased production.

Reserves could even be twice as large thanks to future technological improvements that would allow more oil to be recovered.

Alberta has already reached this rate of growth in the past. Its oil production doubled between 2010 and 2024. Danielle Smith is, however, vague on the timetable she has set for seeing her ambition realized.

What are the obstacles to this growth?

Lack of export capacity is the barrier most often cited by the industry and experts like Kevin Birn, an analyst at S&P Global Commodity Insights. The Trans Mountain pipeline, commissioned less than a year ago, could already be at capacity next year, according to some estimates.

Premier Danielle Smith signed an agreement with Enbridge to find solutions. With the election of Donald Trump, the resurrection of the Keystone XL pipeline project has also returned to the agenda. However, there is not enough will in this matter. The Trans Mountain expansion project took 12 years to complete, and its cost increased sevenfold.

Does Canada have the resources? Yes. Is he certain of having transport capacity? I’m not sure.

The desired pace of expansion would also determine the investment necessary to bring this oil out of the ground, also notes Kevin Birn.

The oil sands industry is focused on optimizing these facilities, he says. How can I get more out of what I have? It’s a [stratégie] efficiency. […] If these are new mines, it will take a decade to build them. It is a significant commitment that requires infrastructure and time.

The last tar sands mine, Fort Hills, from the oil company Suncor, cost 17 billion dollars, and required 10 years of development and 5 years of construction.

Does the industry want to invest?

In recent years, the priority for energy companies has been to increase shareholder dividends and not to invest in new projects. According to Kevin Birn, this orientation has not yet changed, although it has shifted slightly. There is a little more interest towards higher levels of investment, but it is not a shifthe explains.

Political uncertainty, particularly on issues such as capping industry emissions and imposing tariffs, is a factor in corporate investment strategy.

The other element lies in the economic forecasts that companies make, adds Kevin Birn. If we don’t expect demand to be very strong in the future, we’re going to want to get rates of return on investment more quickly.he explains.

Price will be the ultimate determinant of Western Canada’s growth strategy.

Would there be a demand for this oil?

Hydrocarbon demand scenarios differ, but the scientific director of the Trottier Energy Institute at Polytechnique Montréal, Normand Mousseau, says the trend is clear.

We are reaching a point where oil demand is expected to plateau, no matter what Canada or the United States doeshe explains. Profitability requires significant income for a long time and we are no longer in a situation where we can ensure this income.

It’s difficult to see a market that will grow enormously globally.

Kevin Birn emphasizes, however, that Canadian production would not necessarily satisfy new demand, but replace the declining production of other countries. Normand Mousseau replies that geopolitics is essential in the energy market.

By doubling its production, Canada would go from approximately 4% global market share to 8%, an increase that would not go unnoticed by the Organization of the Petroleum Exporting Countries.

Low-price oil-producing countries, such as members of theOPECwill not be ready to see prices fall significantly with a massive increase in oil and they will reactunderlines Normand Mousseau.

And the environmental consequences?

Doubling production does not necessarily mean doubling greenhouse gas emissions. Kevin Birn showed a decoupling of these two elements thanks to technologies to reduce the carbon intensity of barrels of oil.

However, the total number of emissions would increase significantly while this sector is already the largest contributor to Canada’s emissions, accounting for 31% of the national total.

Alberta and the oil industry are pushing for the use of carbon capture and storage to produce more without increasing emissions. However, the technology has not yet been proven on a large scale, and negotiations on public investment are still ongoing.

Is this realistic?

Kevin Birn believes that the conditions for doubling production are not yet in place and that the timetable for achieving this goal plays a huge role in achieving the objective. However, he thinks that Danielle Smith’s ambition should not be taken as an objective cast in concrete, but more like a vision to accelerate growth and attract more investment.

Normand Mousseau, however, believes that this type of message is a waste of time.

This means that we are diverting our attention from transformations that would be much more beneficial for Alberta and Canada in the coming years.he said.