Production by Alberta’s oil and gas industry grew in 2023, a trend likely to continue amid higher prices and increased access to markets via the expanded Trans Mountain pipeline system, according to a new provincial energy forecast.
The Alberta Energy Regulator Energy Outlook is an annual report on the state of hydrocarbon reserves, supply and demand for bitumen, crude oil, natural gas, natural gas liquids, coal and emerging resources such as helium and lithium. Released Monday, it forecasts that demand for oil will rebound and prices will rise in 2025 and beyond in the face of global economic growth.
Afshin Honarvar, the regulator’s principal economist, said Monday that although the price of crude oil fell in 2023, due to high production and slow demand growth, pricing through to 2033 will see a positive trend – hitting US$83 for West Texas Intermediate, a North American benchmark oil price that on Monday sat at around US$81.
Western Canadian Select, which Alberta producers get for their heavier grade of oil, is expected to hit US$70 by 2033, currently just under US$67.
The differential between the two prices will narrow closer to 2033 due to the availability of the additional removal capacity in pipelines, Mr. Honarvar said.
Total capital expenditures in the oil, gas and emerging resources sectors grew to $29.5-billion in 2023, a six-year high. Oil sands investment alone increased by 11 per cent, to $13.2-billion, though investment in non-oil sands crude and in natural gas declined by 6 per cent as companies exerted capital discipline, according to the report.
Total fossil fuel production in Alberta in 2023 increased by 3 per cent over 2022, reaching 6.7 million barrels of oil equivalent a day.
Of that, oil sands production was around 3.4 million barrels a day – about 3 per cent higher than in 2022. By the end of the forecast period in 2033, the regulator anticipates Alberta’s oil sands will produce 4 million barrels a day, Mr. Honarvar said.
Natural gas prices decreased significantly in 2023 due to high production, packed inventories and a relatively mild winter. But Mr. Honarvar expects that to change over the coming years with demand growth from residential power generation and the petrochemical sector.
This year’s report marks the first time that the regulator has added a section on carbon capture and sequestration (CCS), underscoring the importance it places on the technology in the future of the oil and gas sector – much like the provincial government and the industry as a whole.
In 2023, one million tonnes of carbon dioxide were permanently sequestered in Alberta, according to the report. Since 2015, 8.8 million tonnes of CO2 has been injected into storage facilities.
Another 1.6 million tonnes of CO2 were sequestered for enhanced oil recovery, in which carbon-dioxide gas is injected underground in order to draw oil to the surface. It can be used to extract oil from petroleum reservoirs that have already been pumped so thoroughly that they no longer yield easily to other methods.
Enthusiasm for CCS isn’t the only area where the independent regulator echoed messaging from the government and the oil and gas sector.
Mr. Honarvar said fossil fuels “will continue to be a significant and important part of the energy mix, as well as energy transition” in Alberta, and crucial to ensuring energy remains affordable.
“We need to make sure that our energy mix is stable enough to take us through these all ups and downs,” he said. “I think bitumen has those properties, as well as natural gas. They can bring stability to the energy mix and provide that affordability.”