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Alberta is a western province of Canada. With a population of 3,645,257 in 2011 and an estimated population of 4,145,992 as of October 1, 2014,[1] it is Canada's fourth-most populous province and most populous of Canada's three prairie provinces. Alberta and its neighbour, Saskatchewan, were established as provinces on September 1, 1905.[2] The current premier of the province is Rachel Notley. Alberta is bounded by the provinces of British Columbia to the west and Saskatchewan to the east, the Northwest Territories to the north, and the U.S. state of Montana to the south. Alberta is one of three Canadian provinces and territories to border only a single U.S. state and is also one of only two provinces that are landlocked. Edmonton, the capital city of Alberta, is located near the geographic center of the province and is the primary supply and service hub for Canada's crude oil, oil sands (Athabasca oil sands) and other northern resource industries. Approximately 290 km (180 mi) south of the capital is Calgary, Alberta's largest city. Calgary and Edmonton center Alberta's two census metropolitan areas, both of which have populations exceeding one million.
Alberta is the largest producer of conventional crude oil, synthetic crude, natural gas and gas products in Canada. Alberta is the world’s second largest exporter of natural gas and the fourth largest producer.[3] Two of the largest producers of petrochemicals in North America are located in central and north-central Alberta. In both Red Deer and Edmonton, polyethylene and vinyl manufacturers produce products that are shipped all over the world. Edmonton's oil refineries provide the raw materials for a large petrochemical industry to the east of Edmonton.
See also: History of Alberta Energy Regulation
Although Oil and natural gas have existed in Alberta for millions of years, the earliest recorded use of bitumen dates back less than 300 years ago, and the first use of hydrocarbons to generate energy in Alberta date back just over a century ago.The first recorded reference to the Athabasca oil sands was made by Cree Chief Captain Swan who facilitated trade between western First nations hunters and the fur factories of Hudson Bay. Captain Swan reported to the Governer and council at York Fort in 1715 about a small river that flowed into the Churchill River where he found “Gum or pitch”. In 1719 Swan returned to York Fort with a sample of “that Gum or pitch that flows out of the Banks of that River.”[4] However it was not until 1875 that the Geological Survey of Canada began investigating the area. Subsequently, In 1888, Robert Bell, the director of the Geological Survey of Canada, reported to a Senate Committee that "The evidence ... points to the existence in the Athabasca and Mackenzie valleys of the most extensive petroleum field in America, if not the world."[5] Interest was renewed in the Athabasca oil sands in 1893 Parliament passes bill authorizing funds for Geological Survey of Canada to investigate Athabasca oil sands as a source of petroleum.The next year drilling begins at Athabasca oil sands, accidentally striking a reservoir of natural gas which blows wild for 21 years. In 1915, Entrepreneur Sydney Ellis demonstrated the first commercial use for oil sands bitumen, shipping several tonnes of it by water, sleigh and rail to Edmonton for a road paving experiment.[6]
During this period natural gas resources began being developed in the Medicine hat area. In 1883 a Canadian Pacific Railway crew attempting to drill for oil struck a large natural gas deposit 55 kilometers northwest of Medicine Hat. By 1890 Several more wells had been drilled in the area as the growing community began producing gas for homes and factories.[7] Further advances in the development of natural gas came with the completion of a 70-kilometre gas pipeline between Bow Island, Alberta, to Calgary to replace coal gas as a heating, lighting and cooking fuel. The 16-inch (40 centimeter) pipeline was complete in just 86 days. Two years later there was a major natural gas discovery at Turner Valley on the edge of Kananaskis Country. [8]
In 1930, 25 years after the province had been proclaimed as a province, The dominion of Canada transferred mineral rights to the province of Alberta under the Natural Resources Transfer Agreement. The agreement granted the province rights to all minerals, oil and natural gas. The province took possession of approximately 81 per cent of the subsurface mineral rights in Alberta.[9] The same Year, then priemer John Edward Brownlee formed the Alberta Department of Lands and Mines to administer the newly obtained resources. This period also so the beginning of efforts to regulate the industry as the Government of Alberta formed the Turner Valley Gas Conservation Board in 1932 in an effort to limit the practice of wasteful flaring and venting of natural gas. In 1938 the Oil and Gas Conservation Act was passed and Furthur regulating the industry. Subsequently in 1949 The Gas Resources Preservation Act was put in place to facilitate and regulate the Petroleum and Natural Gas Conservation Board to regulate the removal of gas from Alberta . The Board also orders conservation of solution gas.[10]
| Year | Event Discription |
|---|---|
| 1950 | • Coal is replaced by petroleum as Canada's largest source of energy.
|
| 1951 | • A sliding scale is adopted for assessing royalty rates, where the rate changes depending on oil or natural gas price and the level of
production |
| 1952 | • The first sulphur recovery plant is built in Alberta for the recovery of "sour"natural gas. |
| 1953 | • The 1,150-kilometre Trans Mountain Pipeline Company pipeline, is completed carrying oil from Strathcona county, (near Edmonton) Alberta, to Burnaby BC.
|
| 1954 | The Alberta Gas Trunk Line Company Limited (AGTL), Was created to build and operate a province-wide system for natural gas distribution .The system came into operation in In 1957. |
| 1955 | • The Oil and Gas industry in Western Canada's,invests more than 500,000 in development |
| 1957 | • The First natural gas is exported by the Westcoast Energy Inc. distribution system through Vancouver to American markets. |
| 1958 | • Construction of the TransCanada Pipelines system was completed from Alberta to eastern Canada. |
| Year | Event Discription |
|---|---|
| 1960 | •The Gas Utilities Act is introduced, it remains an important part of legislation currently regulating the jurisdiction Covered by the AER. During the 1960s, Population migration to urban centers along with industrialization increased the number of utility customers by 62%. |
| 1961 | •The government of Alberta establishes air quality standards limiting industrial pollution by the oil and gas industry.
|
| 1965 | •The "Cyclic Steam Stimulation" method of oil extraction is piloted, with promising results, eventually enabaling greater access to oil sands petroleum |
| 1967 | • Great Canadian Oil Sands, (now part of Suncor energy Ltd.), Begins the first large-scale operation in the the Athabasca oil sands at Fort McMurray. Total production in 1967 reached approximately 2,500 barrels per day. |
| Year | Event Description |
|---|---|
| 1970 | • The Government of Alberta establishes the Board of Arbitration to process expropriations, a role
which formerly fell to the Public Utilities Board. |
| 1972 | • Alberta Plan includes a proposed mineral tax assessment on recoverable crude oil reserves at fair value with no change in the existing royalty structures well as an incentive program for, Exploratory Drilling. Changes were to take effect in January 1973. |
| 1973 | • OAPEC Oil embargo sets off global energy crisis. In order to stimulate capital investment and lessen the dependence on foreign oil, the Alberta Energy Company Ltd is established.
|
| 1974 | • The Natural Gas Price Protection Plan was introduced. Under the plan the Public Utilities Board is charged with issuing certificates qualifying utilities to receive provincial rebates.
|
| 1975 | •The departments of Lands and Forests, and Mines and Minerals are merged to create the Alberta Department of Energy and Natural Resources
|
| 1978 | •Syncrude Canada Ltd. a consortium of oil companies and the federal and provincial governments, opens oil sands mining and upgrading project at Fort McMurray. This effort combined with the Great Canadian Oil Sands (Suncor Energy Ltd.) operation that began in 1967 increased the total mined bitumen in the province to over 90,000 barrels per day. |
| 1979 | • Alberta´s first ethylene plant was officially opened at Joffre. A second ethylene plant and a polyethylene plant began production in 1984. |
| Year | Event Description |
|---|---|
| 1980 | • In October, the Federal government strengthens the National Energy Program,(NEP) reinforced made-in-Canada price policy. The move was made in an effort to achieve oil self-sufficiency as,well as a greater degree of Canadian control of the energy sector.
|
| 1982 | • The Petroleum Incentives Program Act is enacted in order to promote development of oil and gas in the province following the 1980 National Energy Program. |
| 1983 | • The oil and gas servicing incentive program regulation is implemented, authorizing the Minister to make grants for certain costs incurred in the maintenance of wells, batteries and pipelines. |
| 1985 | • With the election of The Progressive Conservative government under Prime Minister Mulroney the NEP is ended as the Western Energy Accord comes into effect.
|
| 1986 | • The price of natural gas was deregulated by a federal-provincial agreement, the provincial government allowed the Natural Gas Protection Plan to expire, as a result of a significant decline in natural gas prices which occurred after deregulation.
|
See Also: Athabasca Oil Sands
Alberta is Currently the largest producer of conventional crude oil, synthetic crude, natural gas and gas products in Canada. Alberta is the world’s second largest exporter of natural gas and the fourth largest producer.[15] Two of the largest producers of petrochemicals in North America are located in central and north-central Alberta. In both Red Deer and Edmonton, polyethylene and vinyl manufacturers produce products that are shipped all over the world. Edmonton's oil refineries provide the raw materials for a large petrochemical industry to the east of Edmonton.
A large part of Alberta's oil deposits are located in the 'Athabasca oil sands' (also called the Athabasca tar sands or Alberta tar sands) which are large deposits of bitumen or extremely heavy crude oil, located in northeastern Alberta, Canada – roughly centred on the boomtown of Fort McMurray. These oil sands, hosted primarily in the McMurray Formation, consist of a mixture of crude bitumen (a semi-solid rock-like form of crude oil), silica sand, clay minerals, and water. The Athabasca deposit is the largest known reservoir of crude bitumen in the world and the largest of three major oil sands deposits in Alberta, along with the nearby Peace River oil sands and Cold Lake oil sands (the latter stretching into Saskatchewan).[16]
Together, these oil sand deposits lie under 141,000 square kilometres (54,000 sq mi) of boreal forest and muskeg (peat bogs) and contain about 1.7 trillion barrels (270×10^9 m3) of bitumen in-place, comparable in magnitude to the world's total proven reserves of conventional petroleum. The International Energy Agency (IEA) lists the economically recoverable reserves, at 2006 prices and modern unconventional oil production technology, to be 178 billion barrels (28.3×10^9 m3), or about 10% of these deposits.[16] These contribute to Canada's total proven reserves being the third largest in the world, after Saudi Arabia and Venezuela's Orinoco Belt.[17]
By 2009, the two extraction methods used were in situ extraction, when the bitumen occurs deeper within the ground, (which will account for 80 percent of oil sands development) and surface or open-pit mining, when the bitumen is closer to the surface. Only 20 percent of bitumen can be extracted using open pit mining methods,[18] which involves large scale excavation of the land. Surface mining leaves toxic tailings ponds. In contrast, in situ uses more specialized techniques such as steam-assisted gravity drainage (SAGD). "Eighty per cent of the oil sands will be developed in situ which accounts for 97.5 per cent of the total surface area of the oil sands region in Alberta."[19] In 2006 the Athabasca deposit was the only large oil sands petroleum reservoir in the world which was suitable for large-scale surface mining, although most of this reservoir can only be produced using more recently developed in-situ Petroleum production.[17]
Another factor determining the viability of oil extraction from the oil sands is the price of oil. The oil price increases since 2003 have made it profitable to extract this oil, which in the past would give little profit or even a loss. By mid-2014 however rising costs and stabilizing oil prices were threatening the economic viability of some projects. An example of this was the shelving of the Joslyn north project in the Athabasca region in May 2014.[20]
Main Article: Alberta Energy Regulator
The Alberta Energy Regulator (AER) is the regulatory organization established under the 2012 Responsible Energy Development Act. Under the Act the AER is charged with “the safe, efficient, orderly, and environmentally responsible development of hydrocarbon resources over their entire life cycle”[21] within the province of Alberta. The AER was created to centralize and simplify the regulatory structure around oil and gas development, consolidating enforcement of the energy development aspects of the Water Act, the Public Lands Act, The Mines and Minerals Act and the Environmental Protection Enhancement Act.[22] The current Chair of the Board of Directors is Gerry Protti, and the AER's CEO is Jim Ellis.
The AER is responsible for regulating some of the world’s largest reserves of hydrocarbons as well as the infrastructure associated with these resources, including pipelines, wells and processing facilities. In order to ensure the development of these resources is carried out safely and in accordance with existing regulations, the AER is empowered to review proposed energy developments; inspect and oversee energy projects at all stages of their life cycle; correct and penalize non-compliance; and hold public hearings on proposed oil and gas projects. [23]
Under the Responsible Energy Development Act, the AER has the authority to oversee all energy related applications for development made under the Environmental Protection and Enhancement Act, the Water Act, the Public Lands Act, and the Mines and Minerals Act. As the single energy regulator the AER is authorised to regularly inspect oil and gas developments, and utilize enforcement mechanisms to ensure regulatory compliance. [24]
The AER is also responsible for receiving, analyzing and responding to Statements of Concern from landowners, and other stakeholders including First Nations. The AER, after receiving these Statements of Concern, is empowered to hold a public hearing conducted by a panel of AER hearing commissioners. The hearing determines whether complainants “rights might be directly and adversely affected by an application”[25] and have the capacity to withhold or revoke a development application. Additionally, the AER manages the Alternative Dispute Resolution (ADR) which is intended to resolve disputes between members of the public and oil and gas companies, or between two or more oil and gas companies by providing mediation and arbitration services.[26]
Alberta, with an area of 661,848 km2 (255,500 sq mi), is the fourth largest province after Quebec, Ontario, and British Columbia.[27] To the south, the province borders on the 49th parallel north, separating it from the U.S. state of Montana, while on the north the 60th parallel north divides it from the Northwest Territories. To the east, the 110th meridian west separates it from the province of Saskatchewan, while on the west its boundary with British Columbia follows the 120th meridian west south from the Northwest Territories at 60°N until it reaches the Continental Divide at the Rocky Mountains, and from that point follows the line of peaks marking the Continental Divide in a generally southeasterly direction until it reaches the Montana border at 49°N.
Alberta lies within the The Western Canadian Sedimentary Basin (WCSB). The WCSB is a vast sedimentary basin underlying 1,400,000 square kilometres (540,000 sq mi) of Western Canada including southwestern Manitoba, southern Saskatchewan, Alberta, northeastern British Columbia and the southwest corner of the Northwest Territories. It consists of a massive wedge of sedimentary rock extending from the Rocky Mountains in the west to the Canadian Shield in the east. This wedge is about 6 kilometres (3.7 mi) thick under the Rocky Mountains, but thins to zero at its eastern margins. The WCSB contains one of the world's largest reserves of petroleum and natural gas and supplies much of the North American market, producing more than 16,000,000,000 cubic feet (450,000,000 m3) per day of gas in 2000. It also has huge reserves of coal. Of the provinces and territories within the WCSB, Alberta has most of the oil and gas reserves and almost all of the oil sands.
The WCSB is considered a mature area for exploration of petroleum[28] and recent development has tended toward natural gas and oil sands rather than conventional oil. In the WCSB, conventional oil is of two different types: light crude oil and heavy crude oil, each with different costs, prices, and development strategies. Conventional light oil is a mature industry with most of the recoverable oil reserves already produced and production declining by three to four percent per year. Conventional heavy oil is also past its production peak with a future of long-term decline. Alberta, which contains most of the reserves, expects its light-medium crude oil production to decline by 42% from 2006 to 2016, while it expects heavy crude production to decrease by 35% over the same period. However, it also expects bitumen and synthetic crude oil from oil sands will considerably more than offset the decline in conventional crude oil and account for 87% of Alberta oil production by 2016.
Additionally the WCSB contains the majority of Canada's natural gas resources. The WCSB is estimated to have 143 trillion cubic feet (4,000 km3) of marketable gas remaining (discovered and undiscovered), which represents about two thirds of Canadian gas reserves.