Alberta's Energy Minister says oil and gas demand 'not dying,' expects more production in 2023

Alberta's Energy Ministry informed residents Monday that the province expects more energy production well into 2023, including more innovation and jobs.

"Rig counts were up 48% last year over 2021 and are set to increase further this year [and] Alberta's crude oil and equivalent production was up 4% in 2022," reads a government news release.

"The numbers tell the story: A strong energy sector means more activity, more well-paying jobs and more benefits to surrounding communities."

According to Energy Minister Peter Guthrie, the total revenue value of Alberta's energy exports rose two-thirds (67%) to about $148 billion from January to November 2022 compared to the same period in 2021. 

Despite policy wanks claiming oil is a sunset industry, the International Energy Agency (IEA) expects crude demand to climb to a record this year even as Canada sets a new oil production high, despite pipeline constraints and government environmental policies.

In its latest Oil Market Report, the Paris-based IEA expects global oil demand to rise 1.9 million barrels per day (BPD) to a record 101.7 million BPD in 2023, with nearly half of the increase coming from China following the lifting of its COVID restrictions.

According to the Alberta Energy Regulator (AER), Canada hit an annual production record for a second straight year despite pipeline constraints and government environmental policies. Canadian oil output hit a record 4.5 million BPD in 2022 — the fifth largest in the world — with 3.7 million BPD coming from Alberta.

Jet fuel remains the largest source of growth, up 840,000 BPD, presumably from the lifting of travel restrictions as Canadian Snowbirds flock to winter sun destinations. 

According to the independent energy research company Rystad Energy, under the $80 US per barrel price trajectory, upstream oil and gas government revenue, which includes provincial royalties and federal and provincial corporate taxes, in Canada is expected to rise from US $35.2 billion in 2023 to US $65.8 billion in 2032.

On a cumulative basis, between 2023 and 2032, Canadian upstream oil and gas revenue is projected at US $495.2 billion under an $80 US per barrel price trajectory.

Under the $80 US per barrel price trajectory, upstream oil and gas CAPEX in Canada is expected to rise from US $28.2 billion in 2023 to US $47.9 billion in 2032.

On a cumulative basis, between 2023 and 2032, the Canadian upstream oil and gas CAPEX is projected at US $375.4 billion under an $80 US per barrel price trajectory.

The projected government revenue and CAPEX numbers over the next decade indicate the health of the Canadian oil and gas industry. With these numbers, the Canadian Energy Centre said the sector could play a vital role as a "safe, secure, reliable, and clean supplier of oil and gas" to a world facing potential energy disruptions arising from the geopolitical conflict.

The IEA expects non-OPEC production to rise by 1.9 million BPD due to OPEC+ cutting output by 870,000 BPD in light of an EU embargo stemming from the Russian invasion of Ukraine last February. 

The Canadian Energy Centre believes there are definite signs that upstream oil and gas CAPEX and government revenues are recovering and expanding due to a higher energy price environment. 

Although they won't be as high as last year — benchmark Brent hit $130 per barrel in March before falling below $70 in late 2022 — prominent American investment houses, including JP Morgan, are expecting oil prices to climb back above $100 in the second half of 2023 on the back of further Russian supply curbs stemming from the lingering war in Ukraine and future OPEC production cuts. 

The Canadian Energy Centre attributes this to the rising global energy demand, increased attention to energy security, and a greater emphasis on maintaining high environmental standards.

"Alberta is the responsible, reliable and ethical energy-producing powerhouse the world needs now and in the future," added Guthrie. "Whether that is oil and gas, hydrogen, LNG, or our emerging critical mineral industry, looking ahead, our innovation, technology and expertise will continue to benefit Albertans, Canadians, and the global community in 2023."

A strong Alberta energy sector is suitable for families across the country. Guthrie explained that it means more affordable energy, more high-paying jobs and more tax revenue to help pay for hospitals, roads, schools and every other sector of society.