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Alberta separatists’ claim that cooperative fiscal federalism has failed does not stack up to the facts on the ground when we examine forward projections for government revenues (government take) and capital expenditures (capex) in the oil sands sector through 2050.
Under a flat US$70.00 West Texas Intermediate (WTI) per barrel price, government take (which includes provincial royalties and federal and provincial corporate taxes) from the oil sands sector is projected at US$520 billion on a cumulative basis between 2027 and 2050.
Under the same flat US$70.00 West Texas Intermediate (WTI) per barrel price, private sector capital expenditures (capex) in the oil sands sector are projected at nearly US$428 billion.
The analysis here relies on data obtained from the Rystad Energy UCube. Rystad Energy is a highly respected independent energy research company providing data, analytics and consultancy services to clients around the globe. UCube is Rystad Energy’s global upstream database, including production and economics (costs, revenues, and valuations) for more than 80,000 assets, covering the portfolios of more than 3,500 companies. The UCube data set is used to study all parts of the global exploration and production (E&P) activity value chain, including operational costs, investment (capex and opex), fiscal terms, and net cash flows for projects and companies, both globally and by country. While the data presented here is from Rystad, the view expressed here does not reflect the firm’s official view.
The calculations are based on a projection that the WTI price for oil will average US$70.00 per barrel between 2027 and 2050. The government take and capex numbers are expressed in nominal US dollars. The outlook is premised on currently risked projects based on operator guidance. In the likelihood that more clarity around egress project certainty is received, including potential new royalty frameworks for greenfield oil sands developments, there will likely be upside to these projections
Under the US$70.00 per barrel price trajectory, government take from the oil sands is expected to rise from an annual US$15.6 billion in 2027 to US$19.4 billion in 2050, an increase of over 60%.
Under the US$70 per barrel price projection, capex in the oil sands sector between 2027 to 2050 is expected to average US$17.2 billion annually, which reflects a roughly 56% increase versus the 2025 levels of $11 billion.
Without cooperation between the federal government, the Alberta government, and industry, back in 1996, the significant growth of the oil sands industry would not have occurred to anywhere near the same degree as it has over the past three decades and the next 25 years.
Why would Albertans want to put an estimated US $520 billion of government revenues from the oil sands and US$428 billion of capex in the oil sands at risk, and subject those to the vagrancies of a secession event?
As eloquently noted by Adam Legge in the recent report on Canadian confederation by the Canada West Foundation, the case for Canada is certainty. “There are two potential paths before this province (Alberta). One begins a long constitutional negotiation with uncertain outcomes for all Albertans. The other builds off a base of greater certainty and uses Alberta’s existing economic and political strength to achieve a better deal within Canada. The second path is much stronger.”
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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