Alberta's Natural Gas Production and Consumption: Trends and Outlook

Alberta continues to be Canada's leading natural gas producer, with production reaching its highest level since 2010. This comprehensive analysis examines current production volumes, consumption patterns across sectors, pricing trends, and future projections through 2033. The province's natural gas industry is experiencing significant growth in proven reserves while transitioning toward more efficient production methods focused on high-productivity, liquids-rich plays. Domestic consumption continues to be dominated by industrial applications, particularly in the oil sands sector, which is projected to drive nearly half of demand growth over the next decade. With infrastructure enhancements and strategic initiatives focusing on becoming a global supplier of clean, responsibly sourced natural gas, Alberta is positioning itself for continued prominence in the North American and global energy markets.

Current Production Status and Trends

Alberta's natural gas production has reached a significant milestone, achieving its highest levels in over a decade. The average daily production of marketable natural gas in Alberta increased in 2023 to 315.0 million cubic metres per day (106 m3/d) or 11.2 billion cubic feet per day (Bcf/d), marking a 1.9% increase from the previous year[1]. This represents the highest production level since 2010, demonstrating the resilience and continued importance of Alberta's natural gas sector. The production growth was primarily driven by increases in gas production concentrated in the Petroleum Services Association of Canada (PSAC) Foothills Front (area 2) and Northwestern Alberta (area 7)[1].

When examining the composition of this production, total conventional gas production (including tight gas) increased by 2.1% in 2023, while shale gas production grew by 0.3%[1]. Conversely, coalbed methane (CBM) production experienced a decline of 1.4% during the same period[1]. These figures indicate a shift in production focus toward conventional and tight gas resources, while CBM continues its gradual decline. The number of new wells placed on production slightly decreased by 3% to 921 in 2023, influenced by lower natural gas prices, reduced residential and commercial demand due to mild winter weather, and higher inventories[4].

The production landscape in Alberta is evolving with three key trends expected to continue: producers focusing on the most productive plays within the province, attention directed toward liquids-rich plays due to their higher profitability, and continued efforts to optimize infrastructure use and lower costs[1]. These trends reflect the industry's adaptation to market conditions and technological advancements.

Production Forecast and Future Developments

Looking ahead, Alberta's natural gas production is projected to continue its upward trajectory. By 2033, marketable natural gas production is expected to reach 326.7 106 m3/d (11.6 Bcf/d)[1]. This forecast represents a modest but steady growth over the next decade. Production increases are anticipated across the Foothills Front and Northwestern Alberta regions, partially offset by declines from other PSAC areas[1].

The number of new wells is expected to increase over the forecast period, reaching approximately 1,140 new gas wells placed on production by 2033[4]. Most of these new wells will be horizontal multistage fractured wells targeting high-productivity, liquids-rich formations in the western regions of Alberta, as well as shale gas resources[4]. This trend underscores the industry's shift toward more technologically advanced extraction methods and focus on regions with higher potential returns.

Reserve Estimates and Resource Potential

Alberta's natural gas reserve estimates have undergone a significant upward revision, indicating substantial untapped potential. Recent assessments show that Alberta's proven natural gas reserves have increased nearly sixfold to 130 trillion cubic feet since they were last evaluated[2]. This dramatic increase positions Alberta as a major player in global natural gas reserves and provides a strong foundation for continued production growth.

The substantial increase in proven reserves comes at a time when there is growing unease about the future of shale gas production in the United States, particularly in the Permian Basin[2]. While U.S. energy executives are signaling slower growth in 2025 with a possible peak in oil production on the horizon, Alberta's newly assessed reserves suggest a more optimistic outlook for the province's natural gas sector[2]. This contrasting situation could potentially enhance Alberta's competitive position in North American energy markets.

The revised reserve estimates represent a critical development for Alberta's energy industry, providing greater certainty about long-term resource availability and potentially attracting increased investment in natural gas exploration and production. The substantial reserve base supports Alberta's strategic vision of becoming a global supplier of clean, responsibly sourced natural gas and related products[6].

Consumption Patterns and Demand by Sector

Alberta's consumption of its own natural gas production is substantial and growing. In 2023, Alberta's demand for natural gas was estimated at 190.4 106 m3/d (6.8 Bcf/d), which represents approximately 60% of its marketable gas production[4][8]. This demand increased by 2.3% compared to 2022, primarily due to higher requirements from the oil sands and petrochemical sectors[4][8].

The industrial sector dominates natural gas consumption in Alberta, accounting for more than half of the total demand[5]. Within this sector, the oil sands industry is a particularly significant consumer, with natural gas serving as an essential input for operations. In 2023, natural gas demand for oil sands increased by 7.0%, while demand for petrochemicals grew by 4.4%[8]. The commercial start-up of the Inter Pipeline propane dehydrogenation and polypropylene complex contributed to the increased demand in the petrochemical sector[8].

Electricity generation represents another important consumption category, with natural gas demand for this purpose growing by 8% in 2023[8]. This increase reflects the ongoing transition in Alberta's power system, as the province completed its coal-to-gas conversion with the last coal-fired generator converting to gas in June 2024[7]. This shift has established natural gas as a fundamental component of Alberta's electricity generation infrastructure.

Residential and commercial sectors together account for 17% of Alberta's natural gas consumption[5]. In residential applications, natural gas is primarily used for home heating, hot water tanks, and various household appliances. Commercial enterprises such as schools, office buildings, hotels, and restaurants use natural gas for heating, cooling, and cooking, with some larger commercial entities beginning to utilize natural gas for on-site electricity generation as an economical alternative[5].

Forecast for Future Demand

Total domestic demand for natural gas in Alberta is projected to reach 220 106 m3/d (7.8 Bcf/d) by 2033, growing at an average annual rate of 1.5%[8]. This growth rate is slower than the previous decade, which saw demand increase by an annual average of 3.2%[8]. By 2033, Alberta's gas demand is anticipated to represent approximately 67% of its marketable gas production[4].

The oil sands sector is expected to be the primary driver of demand growth, accounting for 49% of the increase over the forecast period[8]. This growth will be mainly driven by increased demand from oil sands in situ operations. Electricity generation is projected to contribute 29% of the demand growth, driven by increases in cogeneration at oil sands facilities and rising demand for power generation[8].

Other sectors combined (residential, commercial, non-oil sands industrial, and transportation) will account for the remaining growth in demand, increasing at an annual rate of about 0.8%[8]. This growth is driven by economic and population expansion, partially offset by energy efficiency improvements.

Market Dynamics and Price Trends

Alberta's natural gas market has experienced relative stability in 2024, but analysts predict changes on the horizon. Following this period of stability, energy prices in Alberta are expected to rise in early 2025, with a potential mid-year dip[3]. This forecast takes into account various factors including natural gas supply and demand dynamics, geopolitical events, and infrastructure developments.

Current energy prices in Alberta (as of 2024) include natural gas at $2.75 per GJ, which serves as a baseline for understanding potential price movements in the coming year[3]. The predicted price fluctuations will have implications for both consumers and industrial users, potentially affecting operational costs and investment decisions across sectors that rely heavily on natural gas.

Several factors drive these price predictions. Natural gas market volatility plays a crucial role, with Alberta's position as one of Canada's largest producers meaning that production levels and export demand significantly influence prices[3]. Global factors such as supply disruptions and geopolitical tensions also affect wholesale prices, while regulatory changes in Alberta's deregulated market allow prices to vary by supplier[3]. Seasonal demand patterns add another layer of complexity, with harsh winters typically increasing demand and prices, while summers may offer some relief[3].

Infrastructure and Transportation

Alberta boasts one of the largest natural gas infrastructures in North America, facilitating the gathering and transportation of gas both within and outside the province[5]. Through an extensive network of pipelines, gas is collected and then transported through numerous export transmission lines to many high-demand markets. The TransCanada Mainline, one of the world's longest gas pipelines, serves as Canada's main interprovincial pipeline, extending from Alberta's eastern border to Montreal[5].

The province's substantial storage capacity further enhances the functionality of this infrastructure system. The combination of Alberta's production capability, storage capacity, and export pipeline network has established the province's infrastructure as one of the most important in North America[5]. This significance is reflected in the fact that the Alberta gas-trading price (the AECO "C" spot price) is one of North America's leading price-setting benchmarks[5].

Recent infrastructure developments have improved market accessibility for Alberta's natural gas. The completion of the West Path Delivery Program in Alberta and British Columbia has enhanced connections between the Western Canadian Sedimentary Basin and high-value downstream markets[8]. Similarly, the completion of the Coastal Gaslink pipeline in 2023 has further improved market access for natural gas from Western Canada[8].

Natural gas removals from Alberta (transfers to other provinces and exports to the U.S.) increased by 1.3% in 2023, as growth in marketable gas production outpaced domestic use[8]. However, removals are projected to decrease over the forecast period to 106.8 106 m3/d (3.8 Bcf/d) by 2033, declining at an average rate of 1.5% annually[8]. This decrease is expected to occur as demand growth outpaces production growth, with domestic consumption increasing as the province likely increases its use of natural gas as a transition fuel toward a low carbon economy[8].

Future Outlook and Strategic Vision

Alberta has developed a clear strategic vision for its natural gas sector, aiming to position the province as a global supplier of clean, responsibly sourced natural gas and related products. The Alberta Natural Gas Vision and Strategy outlines a plan that encompasses not only natural gas but also hydrogen, petrochemicals, and recycled plastics[6]. This strategy supports the long-term growth and strength of the industry, with the goal of ensuring Alberta becomes a global competitor across multiple sectors.

The strategic importance of natural gas for Alberta is underscored by Canada's position among the world's top 5 producers of natural gas, with about two-thirds of production coming from Alberta[6]. The industry employs tens of thousands of people and has the potential to generate billions of dollars in revenue each year, making it a critical component of the province's economic landscape.

Alberta's power system is also undergoing significant transformation, with natural gas playing an increasingly important role. The province completed its coal-to-gas transition with the last coal-fired generator converting to gas in June 2024, marking a key milestone in Alberta's energy transition[7]. This shift toward natural gas as a primary fuel source for electricity generation, alongside growth in renewable energy sources like wind and solar, represents a fundamental change in Alberta's energy infrastructure.

Industrial demand for natural gas is expected to continue growing, with Alberta's industrial sector already accounting for a significant portion of natural gas use in the province[6]. Natural gas and natural gas liquids serve as fundamental inputs to various sectors, including electricity generation, oil sands, and other industries such as petrochemicals, cement, and greenhouse operations[6]. These sectors represent over half of the province's domestic natural gas demand and are expected to experience continued growth[6].

Conclusion

Alberta's natural gas sector demonstrates robust production growth alongside evolving consumption patterns that reflect broader economic and energy transition trends. The significant increase in proven reserves to 130 trillion cubic feet positions the province favorably in comparison to potentially declining U.S. shale plays, providing a strong foundation for future development. Current production levels of 315.0 million cubic metres per day represent the highest output since 2010, with projections indicating continued growth to 326.7 million cubic metres daily by 2033.

Domestic consumption continues to be dominated by industrial applications, with the oil sands sector experiencing 7.0% growth in natural gas demand during 2023. This trend is expected to continue, with oil sands operations projected to account for nearly half of all demand growth through 2033. The completed transition from coal to natural gas for electricity generation further solidifies natural gas as a critical component of Alberta's energy infrastructure, with this sector expected to drive 29% of future demand growth.

Infrastructure developments, including the completion of the Coastal Gaslink pipeline and the West Path Delivery Program, have enhanced market accessibility for Alberta's natural gas. However, the province is projected to reduce its exports over the next decade as domestic consumption increasingly outpaces production growth. This shift aligns with Alberta's strategic vision of utilizing natural gas as a transition fuel toward a lower-carbon economy while simultaneously positioning itself as a global supplier of clean, responsibly sourced natural gas and related products.

As Alberta navigates this complex landscape of production growth, changing consumption patterns, and energy transition priorities, the natural gas sector will continue to play a pivotal role in the province's economic development and energy security. The combination of substantial reserves, established infrastructure, and strategic focus on value-added products provides a strong foundation for the continued evolution of Alberta's natural gas industry.

Citations:

[1] https://www.aer.ca/data-and-performance-reports/statistical-reports/alberta-energy-outlook-st98/natural-gas/natural-gas-production

[2] https://financialpost.com/commodities/energy/oil-gas/alberta-major-revision-oil-gas-reserve-estimates

[3] https://muvar.ca/alberta-electricity-natural-gas-price-outlook-for-2025/

[4] https://www.aer.ca/data-and-performance-reports/statistical-reports/alberta-energy-outlook-st98/natural-gas

[5] https://www.alberta.ca/about-natural-gas

[6] https://www.alberta.ca/natural-gas-vision-and-strategy

[7] https://www.aeso.ca/future-of-electricity/albertas-power-system-in-transition

[8] https://www.aer.ca/data-and-performance-reports/statistical-reports/alberta-energy-outlook-st98/natural-gas/natural-gas-demand

[9] https://guides.library.ualberta.ca/energy/energy-statistics

[10] https://www.spglobal.com/commodity-insights/en/news-research/latest-news/natural-gas/010325-commodities-2025-western-canadian-gas-producers-hope-for-better-after-difficult-year

[11] https://open.alberta.ca/publications/alberta-natural-gas-key-statistics-factsheet

[12] https://www.statista.com/statistics/1402468/electricity-generation-alberta-canada/

[13] https://energynow.ca/2025/03/alberta-has-nearly-six-times-the-natural-gas-it-thought-putting-canada-among-worlds-top-10/

[14] https://www.cga.ca/wp-content/uploads/2024/12/CGA-Natural-Gas-Heating-2024-2025.pdf

[15] https://www.directenergy.ca/en/learn/energy-options/energy-market-update

[16] https://gas.atco.com/en-ca/products-services-rates/rates-billing-energy-savings-tips/energy-101.html

[17] https://open.canada.ca/data/en/dataset/782a11b3-3bfe-41e9-aca6-55cbfccb896a

[18] https://boereport.com/2025/03/24/albertas-massive-oil-and-gas-reserves-keep-growing-heres-why/

[19] https://economicdashboard.alberta.ca/dashboard/natural-gas-production/

[20] https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/provincial-territorial-energy-profiles/provincial-territorial-energy-profiles-alberta.html