Alberta's government expects the completion of three oil export pipelines to boost GDP by as much as 2% by 2023, which will help the province dig its way out of a series of deficits.
In the provincial budget speech March 22, Alberta Finance Minister Joe Ceci said the completion of Kinder Morgan Inc.'s Trans Mountain pipeline expansion, TransCanada Corp.'s Keystone XL and Enbridge Inc.'s Line 3 replacement would increase oil sands exports enough to lift GDP by 1.5 % to 2% by 2023. Ceci said the province would continue to press British Columbia to ensure the C$7.4 billion Trans Mountain expansion, which has been the subject of court battles and protests, is built.
The sale of oil sands crude and other petroleum products is critical to Alberta's finances. The province, which is the owner of most of the oil and natural gas within its boundaries, collects a percentage of production in royalties which it then sells to fund operations. In his speech to the Alberta Legislature, Ceci referenced the province's commitment to ship 50,000 barrels per day of crude over a 20-year span if Keystone XL is built.
"When complete, these pipelines will provide critical market access as oil sands production rises and emissions remain capped, supporting new investment and jobs," Ceci said. "Beginning in 2021, additional revenue resulting from the federally imposed carbon price tied to the construction of the Trans Mountain pipeline will be used to support vital public services as the province stays on track to balance the budget by 2023."
Oil sands shipments have been constrained as production has outstripped existing pipeline capacity. A widening gap between the price of oil sands-derived crude and benchmark U.S. oil has caused some producers to cut production in hopes prices will improve. While the Enbridge Line 3 project and Trans Mountain expansion are under construction, both face court challenges and regulatory hurdles. TransCanada, which has said it has adequate shipper support for Keystone XL, has yet to make a final decision to go ahead with construction.
Alberta's economy has been recovering since a crash in commodities prices in late 2014. In the fiscal year that followed, the province had a deficit of C$10.8 billion. The government predicts it will run a deficit of C$8.8 billion in the current fiscal year, 2018-2019, and have a surplus of C$700 million in the 2023-2024 fiscal year. In addition to increased revenue from oil sales, the province expects to begin to reap the benefits of previously announced programs that would increase sales of partially upgraded oil sands bitumen and natural gas liquids.