Pipeline plans, hydrogen growth and carbon capture shape Alberta’s evolving energy forecast for 2034
Alberta’s oil output climbed to nearly 3.6 million barrels per day in 2024—its highest on record.
The increase was supported by rising bitumen production, favourable pricing, and the expanded Trans Mountain pipeline system, according to the 2025 Alberta Energy Outlook released by the Alberta Energy Regulator (AER).
Total investment in Alberta’s energy sector reached $30.9bn in 2024, the most in nine years, as reported by the AER. This includes spending across conventional crude, natural gas, oil sands, and emerging resources like hydrogen, helium, lithium, and geothermal.
The AER stated the province “continues to lead Canada’s energy story—not only through robust oil and gas production but also by accelerating momentum in emerging resources.”
According to the AER report, crude oil drilling rose 22 percent, and oil sands drilling grew 16 percent, offsetting a 10 percent decline in the natural gas sector.
Overall drilling activity increased 16 percent year-over-year to its highest level in 16 years.
As per the AER, Alberta accounted for 84 percent of Canada’s total oil output and 61 percent of its natural gas production in 2024.
Bitumen alone contributed two-thirds of the country’s total oil-equivalent production. Approximately 48 percent of raw bitumen was upgraded to other products, a 4.5 percent increase from 2023.
However, that share is forecast to decline to 44 percent by 2034 as production outpaces upgrading capacity.
The outlook projects Alberta’s oil production will grow to 4.7 million barrels per day by 2034. This projection holds across scenarios where US import tariffs on Canadian petroleum remain at zero or rise to 10 percent.
In terms of capital spending, the base case sees a climb to $41.5bn by 2034, or $40.1bn if tariffs increase.
Emerging energy sources also drew attention. As per the AER, hydrogen production is expected to grow from 2.6 million tonnes in 2024 to 4.4 million tonnes by 2034, while helium output is forecast to increase fivefold.
Lithium, though not yet commercially produced in the province, is projected to reach 14,000 tonnes annually by 2034.
Canada also more than doubled its natural gas reserves, lifting its global ranking from 15th to 9th, though the AER noted the full impact of the reserve reassessment will be factored into the 2026 forecast.
Carbon capture efforts remained steady, with roughly 1 million tonnes of carbon dioxide permanently sequestered in 2024—similar to 2023.
As reported by The Globe and Mail, federal Natural Resources Minister Tim Hodgson said the Pathways Alliance needs to “get a move on” with its planned carbon capture project to show global markets that Canada’s oil and gas sector is responsible.
Hodgson also emphasized the importance of removing regulatory duplication, stating during a speech to the Toronto Regional Board of Trade, “We must act like a single country – not a patchwork.”
Alberta Premier Danielle Smith, as reported by the Financial Post, expects a private company to propose a new pipeline to British Columbia’s coast within weeks, saying, “I think there will be a private proponent.”
She indicated the proposal is “the most credible and the most economic” among current options.
Smith has also called for a “grand bargain” linking a major carbon capture initiative with a new export pipeline, suggesting both should proceed together.
In January, Alberta signed a letter of intent with Enbridge to explore “market access opportunities” and formed a working group with the company.
Smith said the province would support new pipeline development by committing barrels it collects in royalties.
Smith also expressed hope that a private-sector proposal would be among the first added to Ottawa’s list of nationally significant infrastructure projects, enabled under the recently passed Bill C-5.
The 2025 Alberta Energy Outlook is available on AER’s website in an interactive format, allowing users to generate custom graphs from reported data.
The AER described it as a data-driven, objective tool for industry, government, and other stakeholders to support energy planning and decision-making.
