Oil Sands Fuel Higher Gas Demand in Alberta

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An underrated part of the Alberta gas story has been the steady increase in provincial gas demand over the past decade. Daily demand in the province reached an all-time high in February of 7.69 Bcf/d, passing the previous record of 7.52 Bcf/d set in January 2020 (Figure 1). While last month’s weather was undoubtedly frigid in Alberta, annual gas demand rose ~50% since 2011. Said another way, cold weather is only part of the story.

The primary driver of this demand growth has come from the oil sands, particularly from the ramp-up in production from steam-assisted gravity drainage projects (where gas is burned as part of the extraction processing). Gas consumption from the oil sands jumped  ~70% over the past decade while residential, commercial and industrial (RCI) demand grew 40% over the period (Figure 2). While Albertan gas prices have been challenged over the past five years, albeit with some reprieve in the last two, it’s hard to imagine where some producers might be without this acceleration in local gas demand.

FIGURE 1 | Daily Alberta Gas Demand

Oil Sands Fuel Higher Gas Demand in Alberta

FIGURE 2 | RCI and Oil Sands Demand

Oil Sands Fuel Higher Gas Demand in Alberta

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