Alberta
The Alberta energy transition you haven’t heard about
From the Canadian Energy Centre
Horizontal drilling technology and more investment in oil production have fundamentally changed the industry
There’s extensive discussion today about energy transition and transformation. Its primary focus is a transition from fossil fuels to lower-carbon energy sources.
But in Alberta, a fundamental but different energy transition has already taken place, and its ripple effects stretch into businesses and communities across the province.
The shift has affected the full spectrum of oil and gas activity: where production happens, how it’s done, who does it and what type of energy is produced.
Oil and gas development in Alberta today largely happens in different places and uses different technologies than 20 years ago. As a result, the companies that support activity and the communities where operations happen have had to change.
Regional Shift
For the first decade of this century, in terms of numbers of wells, most drilling activity happened in central and southeast Alberta, with companies primarily using vertical wells to target conventional shallow natural gas deposits.
In 2005, producers drilled more than 8,000 natural gas wells in these areas, according to Alberta Energy Regulator (AER) records.
But then, three things happened. The price of natural gas declined, the price of oil went up and new horizontal drilling technology unlocked vast energy resources that were previously uneconomic to produce.
By 2015, the amount of natural gas wells companies drilled in central and southeast Alberta was just 256. In 2023, the number dropped to only 50. Over approximately 20 years, activity dropped by 99 per cent.
Where did the investment capital go? The oil sands and heavy oil reserves of Alberta’s northeast and shale plays, including the Montney and Duvernay, in the province’s foothills and northwest.
Nearly 60 per cent of activity outside of the oil-rich northeast occurred in central and southeast Alberta in 2005. By 2023, overall oil and gas drilling in those regions had dropped by 30 per cent, while at the same time increasing by 159 per cent in the foothills and northwest.
“The migration of activity from central and southern Alberta to other regions of the province has been significant,” says David Yager, a longtime oil and gas service company executive who now works as a special advisor to Alberta Premier Danielle Smith.
“For decades there were vibrant oil service communities in places like Medicine Hat, Taber, Brooks, Drumheller and Red Deer,” he says.
“These [oil service communities] have contracted materially with the new service centres growing in places like Lloydminster, Bonnyville, Rocky Mountain House, Edson, Whitecourt, Fox Creek and Grande Prairie.”
Fewer Wells and Fewer Rigs
Extended-reach horizontal drilling compared to shallow, vertical drilling enables more oil and gas production from fewer wells.
Outside the oil sands, in 2005, producers in Alberta drilled 17,300 wells. In 2023, that dropped to just 3,700 wells, according to AER data.
Despite that massive nearly 80 per cent decrease in wells drilled, total production of oil, natural gas and natural gas liquids outside of the oil sands is essentially the same today as it was in 2005.
Last year, non-oil sands production was 3.1 million barrels of oil equivalent (boe) per day, compared to 3.4 million boe per day in 2005–but from about 13,600 fewer new wells.
Innovation from drilling and energy services companies has been a major factor in achieving these impressive results, says Mark Scholz, CEO of the Canadian Association of Energy Contractors. But there’s been a downside.
Yager notes that much of the drilling and service equipment employed on conventional oil and gas development is not suited for unconventional resource exploitation.
Scholz says the productivity improvements resulted in an oversupply of rigs, especially rigs with limited depth ratings and limited capability for “pad” drilling, where multiple wells are drilled the same area on the surface.
Rigs have been required to drill significantly deeper wellbores than in the traditional shallow gas market, he says.
“This has resulted in rig decommissioning or relocations and a tactical effort to upgrade engines, mud pumps, walking systems and pipe-handling technology to meet evolving customer demands,” he says.
“You need not go beyond the reductions in Canada’s drilling rig fleet to understand the impact of these operational innovations. Twenty years ago, there were 950 drilling rigs; today, we have 350, a 65 per cent reduction. [And] further contractions are likely in the near term.”
Scholz says, “collaboration and partnerships between producers and contractors were necessary to make this transition successful, but the rig fleet has evolved into a much deeper, technologically advanced fleet.”
A Higher Cost of Entry
Yager says that along with growth in the oil sands, replacing thousands of new vertical shallow gas wells with fewer, high-volume extended-reach horizontal wells has made it more challenging for smaller companies to participate.
“The barriers to entry in terms of capital required have changed tremendously. At one time a new shallow gas well could be drilled and put on stream for $150,000. Today’s wells in unconventional plays cost from $3 million to $8 million each,” he says.
“This has materially changed the exploration and production companies developing the resource, and the type of oilfield services equipment employed. An industry that was once dominated by multiple smaller players is increasingly consolidating into fewer, larger entities. This has unintended consequences that are not well understood by the public.”
More Oil (Sands), Less Gas
Higher oil prices and horizontal drilling helped change Alberta from a natural gas hotbed to a global oil powerhouse.
In the oil sands, horizontal wells enabled a key technology called steam assisted gravity drainage (SAGD), which went into commercial service in 2001 to allow for a massive expansion of what is referred to as in situ oil sands production.
In 2005, mining dominated oil sands production, at about 625,000 barrels per day compared to 440,000 barrels per day from in situ projects. In situ oil sands production exceeded mining for the first time in 2013, at 1.1 million barrels per day compared to 975,000 barrels per day from mining.
Today the oil sands production split is nearly half and half. Last year, in situ projects–primarily SAGD–produced approximately 1.8 million barrels per day, compared to about 1.7 million barrels per day from mining.
Natural gas used to exceed oil production in Alberta. In 2005, natural gas provided 54 per cent of the province’s total oil and gas supply. Nearly two decades later, oil accounts for 60 per cent compared to 29 per cent from natural gas. The remaining approximately 11 per cent of production is natural gas liquids like propane, butane and ethane.
Alberta’s non-renewable resource revenue reflects the shift in activity to more oil sands and less natural gas.
In 2005, Alberta received $8.4 billion in natural gas royalties and $950 million from the oil sands. In 2023, the oil sands led by a wide margin, providing $16.9 billion in royalties compared to $3.6 billion from natural gas.
Innovation and Emerging Resources
As Alberta’s oil and gas industry continues to evolve, another shift is happening as investments increase into emissions reduction technologies like carbon capture and storage (CCS) and emerging resources.
Since 2015, CCS projects in Alberta have safely stored more than 14 million tonnes of CO2 that would have otherwise been emitted to the atmosphere. And more CCS capacity is being developed.
Construction is underway on an $8.9-billion new net-zero plant producing polyethylene, the world’s most widely used plastic, that will capture and store CO2 emissions using the Alberta Carbon Trunk Line hub. Two additional CCS projects got the green light to proceed this summer.
Meanwhile, in 2023, producers spent $700 million on emerging resources including hydrogen, geothermal energy, helium and lithium. That’s more than double the $230 million invested in 2020, the first year the AER collected the data.
“Energy service contractors are on the frontlines of Canada’s energy evolution, helping develop new subsurface commodities such as lithium, heat from geothermal and helium,” Scholz says.
“The next level of innovation will be on the emission reduction front, and we see breakthroughs in electrification, batteries, bi-fuel engines and fuel-switching,” he says.
“The same level of collaboration between service providers and operators that we saw in our productivity improvement is required to achieve similar results with emission reduction technologies.”
Harshanedeep Singh from rozanaspokesman.com
News release from the Conservative Party of Canada
After nine years, the NDP-Liberal government has lost control of crime. Violent crime has skyrocketed by 50 percent since Trudeau became Prime Minister and 256 people were killed by a criminal who was out on bail or another form of release in 2022, the latest year available with full data.
On Saturday, Canadians witnessed the shocking, heinous murder of Harshandeep Singh, a 20-year-old security guard in Edmonton, Alberta. Singh was shot in the back while thanklessly doing his job as a nighttime security guard at a central Edmonton apartment building. A promising young life was snuffed out by a cold-blooded monster.
“One cannot imagine how Harshandeep’s family and friends feel,” said Tim Uppal, Deputy Leader of the Conservative Party of Canada. “Our thoughts and prayers go out to his family at this incredibly difficult time.”
Edmonton Police have since arrested two individuals and charged them with first degree murder: “Evan Rain, 30, and Judith Saulteaux, 30, were arrested and charged with 1st degree murder in relation to Singh’s death.”
Early indications suggest that Rain has a known prior violent history, with media reports aligning with Rain’s current age. In 2018, an “Evan Chase Francis Rain”, then age 24, was charged for a violent kidnapping in Wetaskiwin, one hour south of Edmonton. A woman was forced into the trunk of a car at gunpoint. It is not clear from media reports how this case was concluded.
In 2022, “Evan Rain, 28, of Paul First Nation” (45 minutes west of Edmonton) faced twenty-nine charges for a violent robbery in northern Saskatchewan involving firearms.
This is from the 2022 RCMP news release at the time:
Evan Rain, 28, of Paul First Nation, is charged with:
-one count, robbery, Section 344, Criminal Code;
-one count, have face masked with intent to commit an indictable offence, Section 351(2), Criminal Code;
-eight counts, possess a firearm knowing it was obtained by the commission of an offence, Section 96(2), Criminal Code;
-one count, possession of property obtained by the commission of an offence, Section 354(1)(a), Criminal Code;
-one count, mischief under $5,000, Section 430(4), Criminal Code;
-sixteen counts, possess a firearm while prohibited, Section 117-01(3), Criminal Code; and
-one count, point a firearm, Section 87(2), Criminal Code.
The status of these charges is not readily apparent. The RCMP’s 2022 news release does make clear that Rain was already prohibited from possessing firearms: “sixteen counts, possess a firearm while prohibited, Section 117-01(3).”
“It appears that our so-called ‘justice’ system terribly failed Harshandeep Singh – just as it has outrageously failed so many others,” said Uppal. “Harshandeep Singh’s murder cannot be accepted as just an unfortunate, unavoidable reality in our society. Authorities should answer to Rain’s prior police interactions and potential criminal history, including whether he was out on bail or some other form of release order.”
Life wasn’t like this before Justin Trudeau. Since the NDP-Liberal government passed Bill C-75 and Bill C-5, which gave high priority to releasing repeat violent offenders and took away mandatory jail time for certain violent crimes, a crime wave has been unleashed across the country. This was evident in a report from the Fraser Institute which showed that Canada’s violent crime rate is 14 percent higher than that of the United States’.
Trudeau’s only response to this has been to crack down on law-abiding firearms owners and Indigenous hunters which has done nothing to improve Canada’s public safety. Instead, violent gun crime is up by a staggering 116 percent since the Liberals formed government.
Enough is Enough. Canadians deserve to feel safe in their communities. Only Common Sense Conservatives will bring home safe streets by ending Justin Trudeau’s catch-and-release justice system and bringing jail, not bail, for repeat violent offenders.
Agriculture
Restoring balance between renewable energy, agricultural land and Alberta’s iconic viewscapes
Alberta is known around the world for many things – some of the most breathtaking and iconic scenery on earth, a world-class agricultural industry that puts high-quality food on tables across the globe and a rich history of responsible energy development. Alberta is a destination of choice for millions of visitors, newcomers and investors each year.
To ensure Alberta’s continued prosperity, it is imperative that future energy development is balanced with environmental stewardship, protecting Albertans’ ability to use and enjoy their property, and safeguarding agriculture for continued food security.
Alberta’s renewable energy sector has grown rapidly over the past decade, yet the rules to ensure responsible development have not kept up. As a result, municipalities, agricultural producers and landowners across the province raised concerns. Alberta’s government is fulfilling its duty to put Albertans first and restore the balance needed for long-term success by setting a clear path forward for responsible renewable energy development.
“We are doing the hard work necessary to ensure future generations can continue to enjoy the same Alberta that we know and love. By conserving our environment, agricultural lands and beautiful viewscapes, our government is protecting and balancing Alberta’s long-term economic prosperity. Our government will not apologize for putting Albertans ahead of corporate interests.”
Amendments to the Activities Designation Regulation and Conservation and Reclamation Regulation provide clarity for renewable energy developers on new and existing environmental protections.
These changes will create consistent reclamation requirements across all forms of renewable energy operations, including a mandatory reclamation security requirement. Albertans expect renewable power generation projects to be responsibly decommissioned and reclaimed for future generations. Alberta’s government stands firm in its commitment to protect landowners and taxpayers from being burdened with reclamation costs.
“We want to protect landowners, municipalities and taxpayers from unfairly having to cover the costs of renewable energy reclamations in the future. These changes will help make sure that all renewable energy projects provide reasonable security up front and that land will be reclaimed for future generations.”
Alberta’s government committed to an ‘agriculture first’ approach for future development, safeguarding the province’s native grasslands, irrigable and productive lands. The protection of agricultural land is not only essential to food production, but to environmental stewardship and local wildlife protection.
The Electric Energy Land Use and Visual Assessment Regulation follows this ‘agriculture first’ approach and enhances protections for municipalities’ most productive lands, establishing the need to consider potential irrigability and whether projects can co-exist with agricultural operations. These changes are critical to minimizing the impacts of energy development on agricultural lands, protecting local ecosystems and global food security. With these new rules, Alberta’s farmers and ranchers can continue to produce the high-quality products that they are renowned for.
“Our province accounts for nearly 50 per cent of Canada’s cattle, produces the most potatoes in the country, and is the sugar beet capital of Canada. None of this would be possible without the valuable, productive farmland that these new rules protect. Understanding the need for an ‘agriculture first’ approach for energy development is as simple as no farms, no food.”
The new Electric Energy Land Use and Visual Assessment Regulation also establishes specific guidelines to prevent projects from impacting pristine viewscapes. By establishing buffer zones and visual impact assessment zones, Alberta’s government is ensuring that industrial power projects the size of the Calgary Tower cannot be built in front of UNESCO World Heritage sites and other specified viewscapes, which will support the continued growth and success of Alberta’s tourism sector.
As Alberta’s population and economy grows, it is critical that the province has the additional power generation needed to meet increasing demand. Power generation must be developed in a balanced and responsible manner that promotes environmental stewardship, ensures the continued enjoyment of Alberta’s beautiful landscapes, and safeguards food security by protecting Alberta’s valuable agricultural lands. By encouraging the responsible development of additional power generation with these new regulations, Alberta’s government is listening to Albertans and ensuring the electricity grid is affordable, reliable and sustainable for generations to come.
Summary of Policy Changes
Following the policy direction established on February 28, 2024, Alberta’s government is now implementing the following policy and regulatory changes for renewable power development:
Agricultural lands
The new Electric Energy Land Use and Visual Assessment Regulation takes an “agriculture first” approach.
• Renewable energy developments will no longer be permitted on Land Suitability Rating System (LSRS) Class 1 and 2 lands unless the proponent can demonstrate the ability for both crops and/or livestock to coexist with the renewable generation project,
• In municipalities without Class 1 or 2 lands, Class 3 lands will be treated as Class 1 and 2.
• An irrigability assessment must be conducted by proponents and considered by the AUC.
Reclamation security
Amendments to the Activities Designation Regulation and Conservation and Reclamation Regulation create consistent reclamation requirements across all forms of renewable energy operations, including a mandatory reclamation security requirement. There will be a mandatory security requirement for projects located on private lands.
• Developers will be responsible for reclamation costs via a mandatory security or bond.
• The reclamation security will either be provided directly to the province or may be negotiated with landowners if sufficient evidence is provided to the AUC.
Viewscapes
The Electric Energy Land Use and Visual Assessment Regulation ensures pristine viewscapes are conserved through the establishment of buffer zones and visual impact assessment zones as designated by the province.
• New wind projects will no longer be permitted within specified buffer zones.
o Other proposed electricity developments located within the buffer zones will be required to submit a
visual impact assessment before approval.
• All proposed electricity developments located within visual impact assessment zones will be required to submit a visual impact assessment before approval.
Municipalities
The AUC is implementing rule changes to:
• Automatically grant municipalities the right to participate in AUC hearings.
• Enable municipalities to be eligible to request cost recovery for participation and review.
• Allow municipalities to review rules related to municipal submission requirements while clarifying consultation requirements.
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