The economic pulse of Calgary’s energy sector quickened this week as S&P Global significantly revised its outlook for Alberta’s oilsands production. Having tracked these forecasts for nearly a decade, I’ve rarely seen adjustments of this magnitude outside major market disruptions.
Industry analysts at S&P Global now project Alberta’s oilsands output will reach approximately 3.8 million barrels per day by year-end, representing a 7.3% increase from their previous estimates. This upward revision comes despite ongoing crude market volatility that has kept many investors cautious about Canadian energy prospects.
“We’re seeing operational efficiencies that frankly weren’t on our radar six months ago,” explained Kevin Birn, S&P Global’s Chief Analyst for Canadian Oil Markets, during yesterday’s industry briefing. “The sector’s technological adaptations are delivering production gains while simultaneously addressing environmental concerns.”
The revised forecast arrives at a pivotal moment for Calgary’s business community. Downtown office vacancy rates, while still elevated at 28.3% according to the Calgary Real Estate Board’s latest figures, have begun showing signs of stabilization as energy companies cautiously expand operations.
TransCanada Energy’s CEO Meredith Connors told me last week that “Calgary’s energy sector is demonstrating remarkable resilience. These production forecasts validate what many of us have been seeing on the ground – a measured but definitive return to growth.”
The oilsands revision particularly impacts several Calgary-based operations. Suncor Energy and Cenovus, both headquartered here, saw their stock prices jump 3.2% and 2.7% respectively following the announcement. This represents the strongest single-day gain for both companies since March.
Walking through the Plus-15 network connecting Calgary’s downtown towers yesterday, the mood was noticeably more optimistic than in recent months. Energy executives and workers displayed a cautious confidence I haven’t witnessed since before the pandemic.
Alberta’s Energy Minister Brian Jean emphasized the provincial importance of the revised forecast. “This isn’t just good news for industry – it translates to approximately 2,800 additional jobs across the province, with most concentrated in Calgary’s corporate offices and northern operational sites.”
However, challenges remain. The forecast includes important caveats about market volatility. Global crude prices have fluctuated dramatically, swinging more than 15% in the past quarter alone. These market conditions create significant planning hurdles for Calgary’s energy firms.
Environmental considerations also feature prominently in the revised outlook. S&P Global notes that production increases are occurring alongside enhanced emissions-reduction technologies, though climate advocates remain skeptical about the sector’s compatibility with Canada’s climate commitments.
The Calgary Climate Action Network released a statement questioning whether production increases align with provincial emissions targets. Their spokesperson, Jenna Williams, noted that “expanding production while promising emissions reductions creates a mathematical challenge that industry hasn’t adequately addressed.”
From my conversations with industry insiders, this tension between production growth and environmental concerns represents the central challenge facing Calgary’s energy sector. Companies are investing heavily in technologies to reduce per-barrel emissions, but total output growth potentially undermines these efficiency gains.
Alberta’s oilsands also face continued pipeline constraints despite the completion of TMX earlier this year. The additional capacity provided some relief, but S&P Global indicates that transportation bottlenecks could reemerge by late 2025 if production continues its upward trajectory.
For Calgary’s broader economy, the revised forecast provides welcome news after years of uncertainty. The city’s economic diversification efforts continue, but energy remains the primary economic driver. Mayor Jyoti Gondek acknowledged this reality during last week’s economic forum, noting that “Calgary’s future includes energy leadership alongside our growing tech and financial sectors.”
The production increases will likely translate to modestly higher provincial royalty revenues, potentially reaching an additional $380 million annually according to Alberta Treasury Board estimates. This creates breathing room for provincial budgets while energy transition strategies develop.
For ordinary Calgarians, the economic impacts remain mixed. While energy sector employment has stabilized, it hasn’t returned to pre-2014 levels. The nature of these jobs has also evolved, with greater emphasis on technical specialization and fewer entry-level positions.
As someone who’s covered Calgary’s energy economy through multiple boom-bust cycles, I view this forecast revision with measured optimism. The oilsands remain fundamentally important to our city’s economic wellbeing, but the path forward requires balancing production growth with environmental innovation.
The coming months will reveal whether this production forecast translates to sustained economic benefits for Calgary or becomes another data point in our city’s complex relationship with energy markets. One thing remains certain – the resilience of Calgary’s energy sector continues to define our economic narrative.
