Only threat to Alberta is onset of world peace

An outbreak of world peace and respect for human rights would be disastrous for Alberta. Global happiness would bankrupt this province.

It’s not obvious how Alberta prospers by the world’s misery. Let’s connect the dots.

Alberta has earned the dubious distinction of being one of the most expensive places to develop and produce oil and gas. It’s a combination of geology and public policy.
Because of our long history in the conventional-oil business, the cheap stuff is increasingly hard to find. All the big fields have been discovered and largely drained. What conventional-oil explorers do find today is heavy, wet, sour or small.

Sadly, our oilpatch is also over the hill for natural gas. Increasingly, we’re drilling “resource plays” (a complimentary term for very tight reservoirs that cost a bundle to stimulate) or “non-conventional” supplies like coal-bed methane. The current rig count illustrates that $5.25 per thousand cubic feet for methane is way too low for this basin.

The future of hydrocarbon production is oil so heavy that is must be mined and separated or heated so it will move. High oil prices and massive reserves have made Alberta’s non-conventional oil attractive, but right now this is surely the most expensive petroleum to develop in the world.

Politics don’t help. While the public debate about whether Alberta charges enough economic rent through the lease and royalty system will go on forever, there are significant but seldom discussed soft costs that continue to drive up finding and development costs.

The Financial Post) (Canada)