Alberta Seeks New Incentives for Greenfield Oil Sands Development

Alberta's government is seeking ways to stimulate investment in new oil sands developments, which could help fill a new bitumen pipeline to the British Columbia coast. Premier Danielle Smith has indicated that her government is willing to talk with industry about finding ways to boost greenfield development.

The Alberta government plans to double oil production to 8 million barrels per day by 2035 to support expanded pipeline egress. To meet this target, an estimated $150 billion in new investment will be needed over the next decade. This includes maintenance and sustaining capital, optimization, brownfield extensions and expansions, and greenfields.

The economics of not-yet-producing oil sands projects could be sub-optimal at long-term oil prices between $60.00 to $70.00 U.S. per barrel, according to an estimate by Lennie Kaplan. The Alberta government has indicated that it is willing to consider new royalty incentives to support greenfield development.

Kaplan estimates that there will be a need for a massive wave of new investment, running as high as $150 billion just over the next decade, including maintenance and sustaining capital, optimization, brownfield extensions and expansions, and greenfields. He also notes that existing oil sands operations will begin to reach maturity in the mid-2030s, making greenfield development more critical.

The Alberta government has established a Technical Advisory Group (TAG) to provide advice and recommendations on the proposed pipeline. The TAG's work is being supervised by an Advisory Panel, but Kaplan is calling for the release of their advice and recommendations so that Albertans can make an informed decision on the risks and benefits to taxpayers.