Dave over at The Oil Drum has made an excellent post explaining the problems that we should expect to encounter as conventional natural gas is exhausted and we have to turn to unconventional sources. The problems Dave details for American continental gas supplies is even more exaggerated in Alberta. Because of exports the rate of extraction here is much, much higher. As a result, depletion of natural gas should go over the cliff by about 2012. The DoE energy factbook for Canada lays it out:
In 2002, Canada produced 6.6 trillion cubic feet (Tcf) of natural gas, the third-highest level in the world behind Russia and the United States; the country also consumed 3.0 Tcf in 2002. Despite its high level of natural gas production, Canada’s proven natural gas reserves, 56.1 Tcf as of January 2005, only rank 19 th in the world. These reserves have decreased by 13.3% since 1996, and at current rates, production will completely deplete reserves in 8.6 years.Alberta doesn't have a lot of alternative sources of energy to fossil fuels. There are certainly strong katabatic winds coming down off the Rocky Mountains. Some of the largest wind farms in Canada are located in southwest Alberta where the wind is so vicious the land is only suitable for ranching, not farming. However, as most people are aware wind has an immense intermittency problem and fairly low energy density. Alberta has no significant hydro or solar-electric resource. Technically it would be possible to produce biodiesel from the esterfication of Canola (rapeseed) which should become economic around $120 - 150 / bbl given current market rates for Canola oil. However, the use of arable land for biofuels will have to come at the expense of some other economic activity, most likely beef production.
This all raises the question, if this is now the boom, when is the bust coming? While Alberta is running a $10 billion a year provincial budget surplus, the bulk of that (~ 80 %) comes from natural gas royalties. At current extraction rates, we should expect conventional natural gas to exhaust itself by about 2012. That alone will have a big negative impact on the bottom line for an economy that is becoming increasingly unbalanced. Can coal-bed methane and sour gas pickup the slack? Moreover, what will the hydrogen source for the tar sands become? Without a source of hydrogen the frantic expansion in the tar sands begins to look ill advised. Catalytic cracking of the bitumen to strip off carbon (as practiced by Suncor) is an option but expensive, both in terms of product and CO2 production. Bitumen is already hydrogen poor in the first place, so you have to throw away a large percentage of your product and all you get for it is sulfur-laced coke.