Alberta touts major revision to oil & gas reserve estimates

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Alberta’s proven natural gas reserves have increased nearly sixfold to 130 trillion cubic feet since they were last assessed, according to a new study, giving Canada’s oilpatch leaders something to show off this week at a Texas oil summit in hopes of turning heads and capital flows northward.

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The new study, which also boosted Alberta’s proven oil reserves by seven billion barrels, comes amid growing unease in the United States that the era of shale growth is ending, dampening the outlook for that country’s oil and gas production.

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Despite U.S. President Donald Trump‘s bombastic calls to “drill, baby, drill,” American energy executives at the CERAWeek by S&P Global conference in Houston are signalling slower growth in 2025, with a possible peak in U.S. oil production arriving in the near future.

Peak oil predictions have never gone over well at the conference, which is close to the U.S.’s most prolific oilfield, the Permian Basin.

“It’s a very touchy topic down here, that the Permian is this infinite resource that will always keep going,” Mike Verney, executive vice-president of Calgary-based petroleum reserves audit firm McDaniel & Associates Consultants Ltd. “But the Permian is no longer in its first inning.”

The region spanning parts of West Texas and southwestern New Mexico has been the primary driver of U.S. oil and gas production growth in recent years.

Other shale oil plays have plateaued or declined, but Permian output hit a record 6.3 million barrels per day in 2024, accounting for about half of the U.S.’s total production last year, according to the U.S. Energy Information Administration (EIA).

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But there are signs that the Permian may be entering its twilight, with producers experiencing well-productivity issues and slowing production growth.

The Permian is no longer in its first inning

Mike Verney

The Permian is still expected to sustain moderate U.S. production growth next year, but nowhere near the feverish pace of the boom years of the 2010s, when new drilling techniques and hydraulic fracturing unleashed oil and gas from previously inaccessible tight shale formations, vaulting U.S. crude output ahead of Saudi Arabia and Russia.

The founder of former Permian fracking giant Pioneer Natural Resources Co. raised some eyebrows this week by saying that one of the main reasons his company sold to Exxon Mobil Corp. in 2023 was that it was running out of top-tier drilling inventory.

“We were running out of Tier 1 inventory; everybody’s running out of Tier 1 inventory,” Scott Sheffield said in an interview with CNBC. “The best inventory is going to be run out of Pioneer by 2028, Tier 2 by ’32, so people don’t talk about the fact that we’re running out of inventory.”

On the natural gas side, despite tremendous domestic reserves, questions remain about the U.S.’s capacity to feed both a booming liquefied natural gas (LNG) sector and growing domestic demand for natural gas-fired electricity generation driven by data centres, in part due to a shortage of pipeline capacity.

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Trump’s willingness to use emergency powers to expedite permitting and fast-track project reviews was warmly received by U.S. oil and gas companies, but there are persistent doubts it will translate to the significant increase in production necessary to meet the demand of an LNG export sector that’s expected to double in size by 2028.

Geological degradation and hard-won capital discipline among producers have altered the American oil and gas sector, and operators are no longer leaping to drill new wells even when oil prices are relatively high.

We’re growing like mad in the Montney

Mike Verney

The answer for U.S. companies and investors looking for more accessible resources and economic opportunities lies just a couple of thousand kilometres north in the vast Alberta oilsands and Canada’s prolific Montney shale play, Verney said.

“(U.S.) oil and gas companies have some pretty deep pockets and they should be turning back to Canada, given that they don’t have unlimited running room here,” he said. “We’re growing like mad in the Montney. The major natural gas plays in the U.S. are actually declining versus the Montney that is actually growing.”

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New data suggests Alberta has proven natural gas reserves of 130 trillion cubic feet (TCF), compared to a previous provincial estimate of 24 TCF.

Adding in probable gas reserves — which encompasses supply with a reasonable likelihood of recovery — puts the overall figure at 144 TCF, according to the study commissioned by the Alberta Energy Regulator (AER) and conducted by McDaniel & Associates Consultants Ltd.

The new gas reserve estimate more than doubles Canada’s overall total, pushing the country into the global top 10, the Alberta government said in a release on Wednesday. The country now has the ninth-most reserves, up from 15th previously.

“We’re Texas-sized as far as gas goes; we’ve got some big numbers,” Alberta Energy Minister Brian Jean said on Wednesday.

Alberta is not going anywhere for a long time

Brian Jean

The province is also hoping to lure manufacturing, petrochemicals and data centres with the promise of abundant and relatively cheap natural gas.

“Long term, we are the best place to invest in the world because as other resources dry up, Alberta is not going anywhere for a long time,” he said.

Preliminary new estimates also confirm that Alberta’s proven oil reserves have reached 167 billion barrels, up from the last official estimate of 159 billion, with final numbers expected in the coming weeks once an audit has been completed for all basins.

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By comparison, Texas’ proven reserves in 2023 were 20 billion barrels, according to EIA estimates.

Alberta Premier Danielle Smith called the province’s oil and gas a “secret weapon” in Canada’s trade war with the U.S. and has been broadcasting the new reserve findings while in Houston this week.

The premier has been criticized for her response to Trump’s tariffs on Canadian goods, and her unwillingness to weaponize oil and gas is perceived by some as out of step at times with other premiers.

Smith has said she wants to avoid an escalating trade war with Trump, favouring a “long game” approach that seeks mutually beneficial trade agreements, including a potential new pipeline to deliver more crude to the U.S.

“Whether the U.S. president wishes to admit it or not, the United States not only needs our oil and gas today, they are also going to need it more and more with each passing year once they notice their declining domestic reserves and production are wholly insufficient to keep up with the energy demands of U.S. consumers and industry, let alone having anything left over to export as they do today,” she said.

• Email: mpotkins@postmedia.com

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