Alberta oil production set new record in first half of 2022

Alberta oil production set a new record in the first half of 2022, according to a report by ATB Economics.

Daily production hit 3.6 million barrels a day between January and June up from 3.5 million barrels in the first half of 2021. A decade ago, average production was roughly 2.3 million barrels a day, the report said.

Oilsands accounted for 85 per cent of the total output, according to ATB, although conventional production grew more quickly. Oilsands production was up 24,000 barrels a day relative to 2021, while conventional production rose by about 62,000 barrels a day.

The uptick in conventional production shows a response to the rising price of oil, said market analyst Kevin Birn.

"You can incrementally respond quicker because it's about taking a rig, putting it out there and drilling it," said Birn, who is the chief analyst for the Canadian market at S&P Global.

The smaller increase on the oilsands side, said Birn, is the result of capacity and efficiencies that have been gradually built over the past decade.

Strong output expected in short-term

Birn expects production in the second half of the year to be even stronger.

The long-term picture is less clear, particularly given efforts around climate legislation in Canada and the U.S., according to Kent Fellows, an assistant professor at the University of Calgary School of Public Policy.

He pointed to the recent Inflation Reduction Act in the United States that devotes $369 billion US to measures to combat climate change and could suggest a long-term change in that country's demand for crude oil.

In Canada, the federal government is holding consultations regarding a cap on emissions in the oil and gas sector.

"There's a big question mark there about how that's going to affect that sector, and if it does affect that sector and it does lead to, say, production cuts, what that means for not just the Canadian economybut the Alberta economy in general," said Fellows.

Original graphic by ATB Economics