CALGARY — Alberta’s oil producers pushed output to a record high in 2025 as expanded pipeline capacity opened more room for exports, while capital spending across the province’s energy sector reached its highest level in a decade.The Alberta Energy Regulator’s (AER) 2026 energy outlook forecasts further production growth through 2035, supported by improved market access, stronger demand and continued spending on oil sands expansions.Total capital spending on crude oil, natural gas, oil sands and emerging resources rose 2% in 2025. The regulator projects annual spending across those sectors will reach $42.2 billion by 2035.The expanded Trans Mountain pipeline, which began operating in May 2024, helped producers move more oil to market and narrowed the discount on Alberta’s heavy crude.Western Canadian Select (WCS) averaged US$53.70 a barrel in 2025, down 12% from the previous year as growing global supply weighed on prices.However, its discount to the West Texas Intermediate (WTI) benchmark narrowed to an average of US$11.14 a barrel, compared with US$14.73 in 2024. The regulator attributed the improvement to additional export capacity provided by Trans Mountain..Canada Energy Regulator approves Trans Mountain pipeline tolls settlement.For 2026, the regulator forecasts WCS will average US$71 a barrel before easing to US$57 in 2028. Prices are then expected to gradually recover, reaching US$67.50 by 2035.The report says the Middle East conflict that began in late February 2026 disrupted global energy supplies and drove prices sharply higher, adding uncertainty to the outlook.Disruption in the Strait of Hormuz, through which roughly 20% of the world’s oil and liquefied natural gas supply flows, forced several major producers to curtail output as exports backed up, according to the report.Against that backdrop, the regulator says continued global demand for oil and gas could create opportunities for Alberta to supply additional reliable energy.Alberta’s total primary energy production grew 3% in 2025 to an estimated equivalent of 7.2 million barrels of oil a day. That figure includes natural gas, coal and other energy sources alongside oil.Upgraded and non-upgraded bitumen accounted for 52% of the total..Alberta Energy Regulator approves Vista Coal Mine expansion without public hearing.The regulator forecasts provincial energy production will reach the equivalent of 8.3 million barrels a day by 2035.Natural gas production also increased in 2025, supported by recovering prices and demand from oil sands operations. Producers continued targeting areas rich in natural gas liquids, including products used to dilute bitumen for pipeline transportation.Alberta’s AECO-C natural gas benchmark averaged $1.74 per gigajoule in 2025. The regulator forecasts that price will rise to $2.73 in 2026 and $3.99 by 2035.Despite stronger local prices in 2025, the gap between Alberta’s benchmark and the US Henry Hub price widened as provincial supply and inventories increased.Drilling activity showed a mixed picture. The number of wells drilled from individual surface locations increased 1%, with natural gas drilling rising 19%. Crude oil drilling fell 10%, while oil sands drilling declined 2%.The regulator expects future oil sands growth to come from expansions, work to remove production bottlenecks, new drilling and improvements in operating efficiency.It also points to the federal-provincial memorandum of understanding signed in 2025 to support oil production growth and expanded pipeline export capacity, alongside Alberta’s expedited 120-day provincial approval process for priority projects.While the outlook anticipates continued growth, its price forecasts remain dependent on global demand, economic conditions, market access and geopolitical developments.
