Alberta
Why the oilsands’ weaknesses are turning into strengths

From the MacDonald Laurier Institute
By Heather Exner-Pirot
Global oil prices are recovering from a multi-year bust
Few industrial projects have been more maligned than Canada’s oilsands. It has been called tar sands, a carbon bomb, the “dirtiest oil on the planet.” It’s suffered through the shale revolution, the COVID-19 shutdown, and a torrent of ESG (Environmental, Social and Governance) divestment. Its grade of heavy oil has been discounted and shunned.
But despite the challenges, things are coming up roses. In almost every aspect of the sector that has looked weak in the past decade—costs, grade, carbon intensity—the oilsands are coming on strong, and poised to provide unprecedented revenue streams for Canadian public coffers.
Oilsands are known as “unconventional” oil, which is extraction from anything other than traditional, vertical wells. In northern Alberta, the expansive hydrocarbon resources are in bitumen form, a molasses-like consistency too heavy to flow on its own. It takes a lot of capital and energy to turn the oilsands’ oil into a product that can be transported, refined and used by consumers.
For this reason, the oilsands were seen in the early 2010s as an expensive form of oil, with high up-front costs and a high break-even price: up to USD$75/barrel for new oilsands mines. This made it difficult to compete with cheaper American shale, which came online at scale at the same time as the oilsands, to great chagrin in Calgary.
However, global oil prices are recovering from a multi-year bust, and new “in-situ” extraction technologies have greatly reduced oilsands recovery costs. Break-even prices now average less than USD$40/barrel, and BMO Capital Markets assessed in September that the average oilsands producers could cover their capital budgets and base dividends at USD$46/barrel. By contrast the average large U.S. producer requires USD$53.50/barrel. For new shale wells outside of Texas last year, it was $69/barrel.
Another advantage is that oilsands are low-decline, which means they have decades of inventory, or oil available to be extracted. Shale oil sites have declined as high as 50 percent in the first year. While the oilsands reap the benefits of past investments, shale producers need to continuously drill and invest in new production. (But they haven’t been of late: the U.S. oil rig count has fallen 21 percent since December 2022, largely because of new well costs.)
Another challenge for the oilsands has been its grade: “heavy” or dense, and “sour” or high in sulfur. Light, sweet crudes are easier to refine and have historically sold at a premium. The difference can be stark: at its worst in 2018, West Texas Intermediate (WTI) oil sold for USD$57 a barrel, compared to just USD$11 for heavy Western Canada Select (WCS).
But heavy oil has qualities that are desirable, even necessary for some refined products. Whereas light crude is primarily made into fuels, heavy oil is advantageous for plastics, petrochemicals, other fuels, and road surfacing: things we will still need in a post-combustion, net-zero world. Many American refineries are configured to process heavy oil. Because the U.S. produces virtually none itself, they depend on cheap Canadian sources.
Geopolitical factors are also bolstering heavy and sour oil. Recent production cuts by OPEC+, designed to lift global oil prices, have limited supply of medium and heavy sour grades, which matches the kind of oil the Biden Administration released in its big Strategic Petroleum Reserve sell-off last year. This has brought higher prices for heavy, sour oil, more good news for the oilsands.
As for the oilsands’ biggest Achilles heel, its carbon intensity, this is another weakness turning into a strength. The oilsands are geographically concentrated, with a small number of facilities producing large amounts of emissions. This makes them far easier to decarbonize than conventional oil, which needs huge fleets of rigs creating hundreds of emissions sources in order to produce comparable amounts of oil. Seizing the opportunity, the major oilsands producers are working together on one of the biggest carbon capture projects in the world, building a 400-km CO₂ pipeline that could link over 20 CCS facilities with a carbon storage hub in northeast Alberta. Small modular reactors are another option being explored to reduce emissions. It’s not easy or cheap, but it’s possible to reach net zero, which producers plan to do by 2050.
All of this is not just good news for the oilsands, but for Albertans and Canadians as well. In 2022, royalties going into public coffers from oil and gas extraction hit a record $33.8 billion; that’s more than all royalties from 2016-20 combined. The boost comes not just from higher prices but from Alberta’s strategy to charge significantly higher royalties—up to 40 percent—from oilsands facilities whose upfront development costs have been paid off and revenues are exceeding operating expenses.
A large number of facilities have already reached this threshold, and more are added each year. This flexible new paradigm of permanently higher royalties helps governments moderate the budget rollercoaster of volatile oil prices: nine times more at $55/barrel, and four and half times more at $120/barrel. Next year, when the TMX pipeline adds more than half a million barrels a day of capacity from the oilsands to new markets, the value of royalties will also increase, along with corporate taxes.
Of course, the oilsands still face headwinds from Ottawa, none bigger than a proposal to reduce oil and gas emissions by 42 percent (from 2019 levels) by 2030. Although the oil and gas sector has invested heavily in emissions reductions, and greenhouse gas intensity per barrel fell 20 percent between 2009 and 2020, there is no way to meet the new target without cutting production. S&P Global estimates that 1.3 million barrels of daily output will need to be slashed, which would be an existential threat to the sector. Fortunately, the political tide in Canada is turning in such a way that the oilsands could hang on long enough to see friendlier policies.
Finally, the oilsands remain unloved by investors, although the tide has been turning with higher prices. Their enterprise multiple (EV/DACF), a standard valuation formula, is on average 5.8x as of September and was even lower in 2022. This is much lower than the S&P 500, which has averaged between 11 to 16x in the last few years. In Calgary this has been called the Ottawa penalty box: the only logical explanation for their low valuation seems to be the lack of confidence investors associate with the Canadian energy policy landscape. At any rate, oilsands companies are currently free cashflow machines and are rewarding the shareholders they do have with share buybacks.
After nearly a decade on their back foot, the oilsands have reason for optimism. Lots of people still love to hate them, but they’re starting to rack up some wins.
Heather Exner-Pirot is the director of energy, natural resources and environment at the Macdonald-Laurier Institute.
Alberta
Red Deer Justice Centre Grand Opening: Building access to justice for Albertans

The new Red Deer Justice Centre will help Albertans resolve their legal matters faster.
Albertans deserve to have access to a fair, accessible and transparent justice system. Modernizing Alberta’s courthouse infrastructure will help make sure Alberta’s justice system runs efficiently and meets the needs of the province’s growing population.
Alberta’s government has invested $191 million to build the new Red Deer Justice Centre, increasing the number of courtrooms from eight to 12, allowing more cases to be heard at one time.
“Modern, accessible courthouses and streamlined services not only strengthen our justice
system – they build safer, stronger communities across the province. Investing in the new Red Deer Justice Centre is vital to helping our justice system operate more efficiently, and will give people in Red Deer and across central Alberta better access to justice.”

Government of Alberta and Judiciary representatives with special guests at the Red Deer Justice Centre plaque unveiling event April 22, 2025.
On March 3, all court services in Red Deer began operating out of the new justice centre. The new justice centre has 12 courtrooms fully built and equipped with video-conference equipment to allow witnesses to attend remotely if they cannot travel, and vulnerable witnesses to testify from outside the courtroom.
The new justice centre also has spaces for people taking alternative approaches to the traditional courtroom trial process, with the three new suites for judicial dispute resolution services, a specific suite for other dispute resolution services, such as family mediation and civil mediation, and a new Indigenous courtroom with dedicated venting for smudging purposes.
“We are very excited about this new courthouse for central Alberta. Investing in the places where people seek justice shows respect for the rights of all Albertans. The Red Deer Justice Centre fills a significant infrastructure need for this rapidly growing part of the province. It is also an important symbol of the rule of law, meaning that none of us are above the law, and there is an independent judiciary to decide disputes. This is essential for a healthy functioning democracy.”
“Public safety and access to justice go hand in hand. With this investment in the new Red Deer Justice Centre, Alberta’s government is ensuring that communities are safer, legal matters are resolved more efficiently and all Albertans get the support they need.”
“This state-of-the-art facility will serve the people of Red Deer and surrounding communities for generations. Our team at Infrastructure is incredibly proud of the work done to plan, design and build this project. I want to thank everyone, at all levels, who helped make this project a reality.”
Budget 2025 is meeting the challenge faced by Alberta with continued investments in education and health, lower taxes for families and a focus on the economy.
Quick facts
- The new Red Deer Justice Centre is 312,000 sq ft (29,000 m2). (The old courthouse is 98,780 sq ft (9,177 m2)).
- The approved project funding for the Red Deer Justice Centre is about $191 million.
Alberta
CPP another example of Albertans’ outsized contribution to Canada

From the Fraser Institute
By Tegan Hill
Amid the economic uncertainty fuelled by Trump’s trade war, its perhaps more important than ever to understand Alberta’s crucial role in the federation and its outsized contribution to programs such as the Canada Pension Plan (CPP).
From 1981 to 2022, Albertan’s net contribution to the CPP—meaning the amount Albertans paid into the program over and above what retirees in Alberta received in CPP payments—was $53.6 billion. In 2022 (the latest year of available data), Albertans’ net contribution to the CPP was $3.0 billion.
During that same period (1981 to 2022), British Columbia was the only other province where residents paid more into the CPP than retirees received in benefits—and Alberta’s contribution was six times greater than B.C.’s contribution. Put differently, residents in seven out of the nine provinces that participate in the CPP (Quebec has its own plan) receive more back in benefits than they contribute to the program.
Albertans pay an outsized contribution to federal and national programs, including the CPP because of the province’s relatively high rates of employment, higher average incomes and younger population (i.e. more workers pay into the CPP and less retirees take from it).
Put simply, Albertan workers have been helping fund the retirement of Canadians from coast to coast for decades, and without Alberta, the CPP would look much different.
How different?
If Alberta withdrew from the CPP and established its own standalone provincial pension plan, Alberta workers would receive the same retirement benefits but at a lower cost (i.e. lower CPP contribution rate deducted from our paycheques) than other Canadians, while the contribution rate—essentially the CPP tax rate—to fund the program would likely need to increase for the rest of the country to maintain the same benefits.
And given current demographic projections, immigration patterns and Alberta’s long history of leading the provinces in economic growth, Albertan workers will likely continue to pay more into the CPP than Albertan retirees get back from it.
Therefore, considering Alberta’s crucial role in national programs, the next federal government—whoever that may be—should undo and prevent policies that negatively impact the province and Albertans ability to contribute to Canada. Think of Bill C-69 (which imposes complex, uncertain and onerous review requirements on major energy projects), Bill C-48 (which bans large oil tankers off B.C.’s northern coast and limits access to Asian markets), an arbitrary cap on oil and gas emissions, numerous other “net-zero” targets, and so on.
Canada faces serious economic challenges, including a trade war with the United States. In times like this, it’s important to remember Alberta’s crucial role in the federation and the outsized contributions of Alberta workers to the wellbeing of Canadians across the country.
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