Oil production in Alberta getting back on track
Total output in 2021 should come in higher than its pre-pandemic level
By ATB Economics 18 February 2021 2 min read
When billions of dollars and thousands of jobs are on the line, “it could’ve been worse” is not what you want to hear. But when it comes to Alberta’s total oil production in 2020, it could’ve been worse.
Between the pandemic, an oil price war, prices slipping into negative territory, ongoing pipeline challenges, lockdowns, travel restrictions and a second wave of the virus, the fact that Alberta’s annual oil production was down by “only” 5.1 per cent last year (65.4 million barrels) is pretty amazing.
This points to the resiliency of our oil patch and the tough decisions that had to be made to stay afloat during the rough economic weather. The pain brought on by those decisions was significant with jobs lost, projects shuttered and balance sheets covered in red ink.
Oil production in Alberta was down on a year-over-year basis from April 2020 through October 2020, but rose above 2019 levels in both November and December.
Annual oil production increased in 8 of the last 10 years. It fell by 0.6 per cent in 2016 due to the forest fires that stymied production in northern Alberta that year.
Total output in 2021 should come in higher than its pre-pandemic level, but this assumes that vaccines put the pandemic on its heels and U.S. and global demand stays strong.
So far in 2021, oil prices have been bolstered by rising demand, the expectation that vaccination programs will be effective at curbing the pandemic and ongoing supply cuts on the part of OPEC+ producers. If the higher prices hold, they will elevate production levels and spur a faster recovery in Alberta. If, however, things go awry on the pandemic front or OPEC+ changes course, the opposite will happen.
Answer to the previous trivia question: Almost 83 per cent of the new vehicles sold in Alberta last year were manufactured in North America* (Canada, U.S. and Mexico).
Today’s trivia question: Not including the + countries such as Russia and Mexico, how many members does the Organization of the Petroleum Exporting Countries (OPEC) currently have?
*New motor vehicles fall into two categories defined on the basis of origin: those manufactured in North America and those manufactured overseas. The latter are imported in a fully assembled state from countries other than the United States or Mexico.