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By Lennie Kaplan
New modeling reveals that Alberta oil sands gross domestic product (GDP) could be boosted by an additional $110 billion or 25% over the next decade though a new economic deal that keeps our province within a united Canada, rather than pursuing Alberta independence.
The modeling assumes an increase in Alberta’s oil production to around 7.5 million barrels per day (mb/d) by 2035 if Alberta remains within Canada, roughly aligned with the Alberta government’s roadmap target of 8 mb/d by 2035.
The level of Alberta oil production achieved by remaining in Canada is assumed to result in expanded pipeline egress and incentivize an estimated 16 Mt in annual carbon capture and storage (CCS) in the oil sands sector by 2035, according to my modeling.
While there are continuing economic questions on whether this level of oil production is in fact achievable by 2035, it appears that investments in such projects as the West Coast Oil Pipeline (WCOP), other announced pipeline expansions and optimizations, brownfield and greenfield oil sands projects, and the Pathways CCS project could all be jeopardized by the significant uncertainties associated with Alberta independence.
Pursuing a new economic deal between Alberta and Canada, rather than independence, will benefit all Canadians, and give our country greater leverage in difficult negotiations with the United States over a renewed CUSMA. Trade leverage for Alberta and Canada is derived from strength and unity, not weakness and division.
Other key findings drawn from my modeling work regarding the positive impact that Alberta’s oil sands can achieve through Alberta pursuing a new economic deal within a united Canada, rather than pursuing independence, include
- Up to a $19 billion or 54% increase in oil sands GDP in 2035
- Up to a $185 billion or 78% boost in oil sands cumulative investment over the next decade
- Up to a 23,000 or 48% increase in Alberta oil sands jobs in 2035
- Up to a $3 billion or 44% boost in provincial government oil sands royalties in 2035
- Up to a $16 billion or 16% increase in cumulative provincial government royalties over the next decade.
The oil sands sector is a demonstrated Alberta and Canada success story and has generated significant economic and financial benefits over the nearly six decades since production began in 1967.
Oil sands investors seek the stable policies, rules and regulations that a united Canada provides, conditions that may not materialize under a separate Alberta. In fact, negotiations between an independent Alberta, the rest of Canada (ROC), and other countries, such as the United States, are likely to be protracted on such critical issues as oil sands market access and terms of trade. This could create great uncertainty, and investors don’t like uncertainty.
I am somewhat disappointed that Premier Smith and the Alberta government have not, to this point in time, been more vocal about how Alberta’s oil sands sector has grown and prospered under a strong Alberta within a united Canada. It is one of the ultimate success stories in Alberta and Canadian history and it should be celebrated as such.
I am calling on the University of Calgary School of Public Policy (SPP), the Advisory Panel, the Calgary Chamber of Commerce, the Alberta government and the Alberta Transition Council, to provide a comprehensive assessment of the positive impacts on the oil sands from Alberta pursuing a new economic deal within Canada when these organizations release their analytical reports in the next couple of weeks.
Lennie Kaplan is a former senior manager in the Fiscal and Economic Policy Division of Alberta’s Ministry of Treasury Board and Finance (TB&F), where, among other duties, he worked on energy issues, including participating on the Clean Energy Strategic Advisory Committee (CESAT) and the Alberta Competitiveness Review. In 2019, he served as executive director to the MacKinnon Panel on Alberta’s Finances.
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