Alberta Oil News: Latest Updates 2021

Alberta is a province in Western Canada. It is perhaps best known for its oil sands region, the third-largest proven oil reserve in the world.¹ For decades, this fossil fuel has helped Alberta to prosper, but recent global and national events have made the sector increasingly vulnerable.² The latest updates on the situation in Alberta suggest that their oil sector is now in decline.

Latest Alberta oil news

The oil industry in Alberta has suffered recently due to unforeseen global events. Russia and Saudia Arabia embarked on an oil price war in March 2020 that saw prices cut by half.³ The coinciding COVID-19 outbreak led to an unprecedented drop in global fuel consumption.⁴ The provincial government offered the industry a 2 per cent general business tax rate reduction and promised an investment of USD 7.3 billion in infrastructure to create jobs.⁵ Nevertheless, Alberta’s unemployment rate leapt from 6.9 per cent in 2019 to 11.4 per cent in 2020.⁶

These setbacks for Alberta’s oil are part of a wider movement. Environmentalists and Indigenous communities have long campaigned against the expansion of Alberta’s oil sands and its oil and gas implications.⁷ They point out that extracting and refining the bitumen is more destructive and carbon-intensive than other methods such as utilising natural resources.⁸ This has helped to halt and delay projects for enlargements such as the controversial Keystone XL tar sands pipeline.⁹ It’s quite possible that these groups have provided the impetus for US President Joe Biden to potentially declare a cancellation of the Keystone XL pipeline, as one of his primary executive acts in government in January 2021. This has, in turn, elicited opposing sentiments on Twitter from Alberta Premier Jason Kenney, and also Vivian Krause.

US competitors have been unencumbered by capacity shortages and therefore pose more attractive investment opportunities.¹⁰ Subsequently, the price of Alberta’s oil has yet to recover from a slump that began in 2014.¹¹ The sector did not make the top ten most competitive oil patches in 2020, despite its enormous size.¹²

What are the repercussions for Alberta?

There is an ongoing trend in the energy industry to move away from Alberta as a site for investment.¹³ Equinor, Murphy Oil Corp, Royal Dutch Shell Plc, Total SA and BP Plc have all sold off their holdings in Alberta to cut costs and refocus efforts elsewhere.¹⁴ Historically, Alberta had attracted Canadian workers from as far east as Newfoundland and Labrador.¹⁵ Now, however, inter-provincial migration to Alberta has decreased substantially as unemployment figures rise.¹⁶

Whilst demand for fossil fuels is not going to disappear overnight, the development of renewables and the expansion of electric vehicles have reduced the oil sector’s profitability.¹⁷ Investors are becoming increasingly aware of the impact oil has on the environment, and it is affecting oil companies’ ability to access capital, with serious consequences for Alberta’s oil industry.¹⁸ The latest Alberta oil news seems to confirm that the time has come to move away from their historical dependence on oil.¹⁹

1. Leahy, S. (2019). This is the world’s most destructive oil operation—and it’s growing. [online] Nationalgeographic.com. Available at: https://www.nationalgeographic.com/environment/2019/04/alberta-canadas-tar-sands-is-growing-but-indigenous-people-fight-back/.
2. Mar 13, A.F.P. on and 2020 2:28pm (2020). It’s high time Alberta dealt with its oil addiction. [online] iPolitics. Available at: https://ipolitics.ca/2020/03/13/its-high-time-alberta-dealt-with-its-oil-addiction/ [Accessed 18 Jan. 2021].
3. Yaffa, J. (n.d.). How the Russian-Saudi Oil War Went Awry—for Putin Most of All. [online] The New Yorker. Available at: https://www.newyorker.com/news/dispatch/how-the-russian-saudi-oil-war-went-awry-for-putin-most-of-all.
4. Statista. (n.d.). Daily global crude oil demand 2006-2020. [online] Available at: https://www.statista.com/statistics/271823/daily-global-crude-oil-demand-since-2006/#:~:text=Global%20demand%20for%20crude%20oil.
5. OilPrice.com. (n.d.). Texas, Oklahoma Overtake Alberta As Oil Investment Hotspots. [online] Available at: https://oilprice.com/Latest-Energy-News/World-News/Texas-Oklahoma-Overtake-Alberta-As-Oil-Investment-Hotspots.html [Accessed 18 Jan. 2021].
6. financialpost. (n.d.). Burning Questions: Will Canada’s most oil-dependent provinces bounce back next year? [online] Available at: https://financialpost.com/commodities/energy/burning-questions-will-canadas-most-oil-dependent-provinces-bounce-back-next-year [Accessed 18 Jan. 2021].
7. The Economist. (2020). Oil-rich Alberta seeks ways to go green. [online] Available at: https://www.economist.com/the-americas/2020/12/05/oil-rich-alberta-seeks-ways-to-go-green [Accessed 18 Jan. 2021].
8. Center for Biological Diversity. (n.d.). No Tar Sands. [online] Available at: https://www.biologicaldiversity.org/campaigns/no_tar_sands/index.html [Accessed 18 Jan. 2021].
9. the Guardian. (2020). Major blow to Keystone XL pipeline as judge revokes key permit. [online] Available at: https://www.theguardian.com/environment/2020/apr/15/keystone-xl-pipeline-montana-judge-environment.
10. https://oilprice.com/Latest-Energy-News/World-News/Texas-Oklahoma-Overtake-Alberta-As-Oil-Investment-Hotspots.html
11. The Economist. (2020). Oil-rich Alberta seeks ways to go green. [online] Available at: https://www.economist.com/the-americas/2020/12/05/oil-rich-alberta-seeks-ways-to-go-green.
12. Smith, S. (2021). How can Alberta make itself more attractive for oil and gas investment? | BOE Report. [online] boereport.com. Available at: https://boereport.com/2021/01/14/how-can-alberta-make-itself-more-attractive-for-oil-and-gas-investment/ [Accessed 18 Jan. 2021].
13. financialpost. (n.d.). Norwegian oil company to quit Alberta, focus on offshore activities in Atlantic Canada. [online] Available at: https://financialpost.com/commodities/energy/norwegian-oil-company-to-quit-alberta-focus-on-offshore-activities-in-atlantic-canada [Accessed 18 Jan. 2021].
14. financialpost. (n.d.). Norwegian oil company to quit Alberta, focus on offshore activities in Atlantic Canada. [online] Available at: https://financialpost.com/commodities/energy/norwegian-oil-company-to-quit-alberta-focus-on-offshore-activities-in-atlantic-canada [Accessed 18 Jan. 2021].
15. financialpost. (n.d.). Norwegian oil company to quit Alberta, focus on offshore activities in Atlantic Canada. [online] Available at: https://financialpost.com/commodities/energy/norwegian-oil-company-to-quit-alberta-focus-on-offshore-activities-in-atlantic-canada [Accessed 18 Jan. 2021].
16. financialpost. (n.d.). Norwegian oil company to quit Alberta, focus on offshore activities in Atlantic Canada. [online] Available at: https://financialpost.com/commodities/energy/norwegian-oil-company-to-quit-alberta-focus-on-offshore-activities-in-atlantic-canada [Accessed 18 Jan. 2021].
17. Narwhal, T. (n.d.). What’s next for Alberta’s oil sector? Reflecting on a year of layoffs, writedowns and consolidation. [online] The Narwhal. Available at: https://thenarwhal.ca/alberta-oil-industry-2020-recap/ [Accessed 18 Jan. 2021].
18. Narwhal, T. (n.d.). What’s next for Alberta’s oil sector? Reflecting on a year of layoffs, writedowns and consolidation. [online] The Narwhal. Available at: https://thenarwhal.ca/alberta-oil-industry-2020-recap/ [Accessed 18 Jan. 2021].
19. Mar 13, A.F.P. on and 2020 2:28pm (2020). It’s high time Alberta dealt with its oil addiction. [online] iPolitics. Available at: https://ipolitics.ca/2020/03/13/its-high-time-alberta-dealt-with-its-oil-addiction/.