In 2009, Alberta’s Gross Domestic Product (GDP) was $260 billion, higher per capita than all other provinces. The province’s fiscal fortunes have traditionally been closely tied to the land—based first on the fur trade, then agriculture, and for the final 30 years of the 1900s on abundant reserves of three fossil fuels—coal, oil, and natural gas. The province’s location away from main trade routes had always hindered economic diversity and fostered a boom-or-bust dependence on natural resources and agriculture, which account for 29 percent of total GDP (against under 3 percent elsewhere in Canada). And although Alberta’s industrial and commercial sectors would collapse without these resources, the province is at the forefront of the information technology tidal wave, making its economy less susceptible to ever-changing commodity prices.
Alberta lies above a vast basin of porous rock containing abundant deposits of oil, natural gas, and coal. These were formed hundreds of millions of years ago in the Carboniferous period (hence “fossil fuels”), which gets its name from carbon, the main element in coal. An estimated 200 million barrels of recoverable oil occurs in three forms. Conventional crude oil is recovered through normal drilling methods. More than 5,000 pools holding a total of 1.6 billion barrels have been discovered, but half the oil production comes from just 25 of the pools. In total, 540,000 barrels are extracted daily, much of this amount from pumpjacks (known in the United States as nodding donkeys) you’ll see in rural areas across the province. Most of this oil is refined for use as gasoline in cars, diesel for trucks, and heating fuel for homes. Heavy oil is more difficult to extract, and its uses are limited. In the future, however, as technology improves, recovery will become economically viable. Oil sands consist of a tarlike mixture of sand and bitumen that is mined then refined into synthetic crude for use in fuel products. The Athabasca Oil Sands, near Fort McMurray, are the world’s largest such deposit, with 175 billion barrels recoverable using today’s technology from a total reserve of 1.6 trillion barrels. Currently, 1.3 million barrels are extracted daily, with conservative estimates putting the rate at three million per day by 2020. As conventional crude diminishes, Alberta’s heavy oil and oil sands are playing an increasingly important role in meeting world energy demands. Alberta is already the world’s largest producer of synthetic crude, and it is estimated that 60 percent of the province’s oil production will be of this form in the coming years. Currently, the province is contributing over 50 percent of Canada’s total energy production. The Department of Energy promotes effective management of the province’s oil resources and collects royalties for the government.
Natural gas was first discovered near Medicine Hat in 1883, but it wasn’t seen as a viable source of energy until 1900. The price of gas tends to mirror that of oil, and when prices peaked in 2001, drilling increased. Proven reserves stand at two trillion cubic feet, with five trillion cubic feet extracted annually from 9,400 wells. Canada is the world’s third-largest natural gas producer, with Alberta supplying over 80 percent of the country’s total output. The province has always had more gas than it can use. After impurities are removed at gas plants, 75 percent of it is exported, via pipelines, to other provinces and the United States. Gas is mostly used for home heating but is also a source material for the petrochemical industry. Gas that contains more than 1 percent hydrogen sulphide is known as sour gas. It requires special processing to extract the hydrogen sulphide (which is used in fertilizers).
Coal is North America’s most common fossil fuel. Alberta contains 60 percent of Canada’s known coal resources, much of it low in sulfur, meaning it burns cleanly and efficiently. Large deposits were mined early on in Crowsnest Pass, Drumheller, and the foothills, and by the 1920s coal mining had developed into a major industry. Coal was first used to heat homes and provide fuel for steam locomotives, but oil took over those duties in the early 1950s. The industry was revived in 1962 when a coal-fired electric power plant opened at Wabamun, west of Edmonton. This market has since broadened, and seven Albertan mines supply 50 percent of Canada’s coal, 70 percent of which is used for meeting 90 percent of Alberta’s power needs.
Industrial, nonmetallic minerals such as limestone, shale, and salt are mined for consumption within Alberta. Limestone mined on the edge of Banff National Park and in the Crowsnest Pass is processed to produce cement and chemical lime. Sulfur, which is extracted as a coproduct of natural gas, is exported to the large agricultural markets of the United States, Europe, and Africa for use in fertilizer. Metallic minerals such as copper, silver, and gold have all been mined at some stage, but compared to other areas of Canada, the province has been poorly explored. Four brining operations produce over one million tons of salt annually. Diamond exploration in the north of the province has led to a few finds, but not in amounts to make extraction viable.
Canada is the world’s largest producer of uranium, the feedstock for nuclear reactors (15 percent of Canada’s electricity comes from nuclear power). With demand continuing to outpace supply, exploratory drilling that led to a staking rush in southern Alberta that continues today may have particular importance in the future.
Alberta produces 3.9 billion kilograms (8.6 billion pounds) of petrochemical products annually in four main plants, including the world’s largest. Manufactured from crude oil and natural gas, the latter is used as a “feedstock” to produce ethylene, which is used in the production of consumer products such as plastic and nylon.
Although oil and gas form the backbone of Alberta’s economy, 53,000 farms and ranches dominate the landscape. More than 20 million hectares (49 million acres) are used for agriculture, more than half of them cultivated—a backbreaking job that was started when the first homesteaders moved west. Approximately 75 percent of this land is irrigated, thanks to massive projects such as the Oldman River Dam, and the remainder is dryland farmed. Alberta produces about 23 percent of Canada’s total agricultural output, directly employing 50,000 people in the process. The largest portion of the province’s $5 billion annual farm income comes from beef ($1.6 billion). Alberta has 5.9 million head of beef cattle—around 40 percent of Canada’s total—as well as 140,000 dairy cows. Pork comes in as the second-most important agri-food export. This industry is worth over $500 million to the local economy, with poultry eggs generating over $310 million annually.
Crops combined are worth over $2 billion. The most important crops, which combine for 70 percent of total revenue, are grains and oil seeds. These are wheat, used mainly for bread and pasta; barley, used for feeding livestock and making beer; and canola (recognizable by the bright yellow fields). Other crops include oats, rye, and flax. The largest areas of vegetable production are east of Lethbridge, where the corn and sugar-beet industries thrive.
Although 60 percent of Alberta is forested, the forestry industry constitutes only 0.1 percent of the province’s gross domestic product; current annual harvest is five million cubic meters. The main reason for such a small yield is the slow regrowth rate of the northern forests. The province has 300 sawmills, primarily producing dressed lumber. The forests are managed by the department of Sustainable Resource Development.
Worth $5.8 billion annually, tourism is the second-most important industry to Alberta’s economy, lagging only slightly behind the petroleum industry in revenues and employing twice as many people. The province welcomes 22 million visitors annually. Of this total, 18 million are from Canada. Visitor numbers from the United States have dropped to just under one million since new passport regulations came into effect. Visitors from the United Kingdom, Japan, Germany, and Australia make up the bulk of the remainder. Banff National Park and West Edmonton Mall are Alberta’s two most popular tourist attractions, although obviously they offer very different experiences. Travel Alberta is a corporation that markets the province worldwide as a tourist destination. The Alberta government has helped in other ways, too, investing millions of dollars of royalties from the oil and gas industry into improving facilities, building interpretive centers, and developing recreational playgrounds such as Kananaskis Country.
© Andrew Hempstead, from Moon Western Canada, 3rd Edition