REVEALED: Oil and gas contributed trillions to economy over decades — while many concerned over cleanup cost

The oil and gas sector has contributed between $5 trillion and $7 trillion to Alberta and $10 trillion to $15 trillion to Canada over the decades—according to extrapolations based on variables like GDP, revenue, and trade value.

"The oil and gas industry offers significant benefits. Consider this: last year, the provincial government collected $18 billion in royalties," said Energy and Minerals Minister Brian Jean during a media scrum on Tuesday.

"That $18 billion enables us to build excellent schools in Calgary and Edmonton, construct new hospitals, and provide care to all Albertans. This support extends to social services, seniors' programs, medical care, teachers, and teachers' assistants — all of which are essential."

"None of this quality of life would be possible for Albertans without the hard work of the men and women in the oil and gas industry. Is it perfect? No, but we do it better than anywhere else on the planet."

Jean made the remarks amid renewed concern in Alberta over the billions of dollars needed to remediate old oil and gas infrastructure—wells, pipelines, and facilities left behind by defunct companies.

In January, the province intensified efforts to address the problem by ordering the seizure of approximately 2,500 wells, pipelines, and facilities from Sequoia Resources Corp., a bankrupt oil and gas firm.

The Globe and Mail reported on Tuesday that an Alberta government panel has proposed a "mature asset strategy" to tackle the cleanup of about 274,215 marginal, inactive, or decommissioned oil and gas wells—over half of all licenced wells in the province.

Some fear the costs will be offloaded to taxpayers — undermining the polluter-pay principle.

Key proposals include creating special-purpose entities like "ClosureCo" to acquire and remediate old wells and "HarvestCo" to maximize production from these assets to fund cleanup efforts, reported the Globe.

"We will not give public money to private companies to clean up their mess," said Jean.

The oil and gas sector is the backbone of Alberta's economy. Statistics Canada data indicate that from 2000 to 2020, oil and gas extraction averaged 21% of Alberta’s GDP annually.

In 2018, Alberta’s GDP was $338.2 billion, with the energy sector contributing over $71.5 billion that year alone.

Extrapolating this contribution across decades is complex due to fluctuating oil prices and production levels, but an estimate can be derived.

From 1985 to 2018, when oil and gas peaked at over 7% of Canada’s GDP—much of it from Alberta—the sector’s direct GDP contribution to Alberta likely ranged between $20 billion and $80 billion annually in nominal terms, adjusted for inflation and price swings.

Over 50 years, from 1970 to 2020, this suggests a direct GDP contribution of approximately $1.5 trillion to $2 trillion in 2018 dollars.

Adding indirect and induced effects — like supply chain activity and job-related spending — which studies from the Canadian Energy Centre suggest can double or triple direct impacts, the total economic contribution to Alberta could range from $3 trillion to $5 trillion over five decades.