Budget 2025: What It Means for Oilfield Service Firms

The Bottom Line

Budget 2025 forecasts continued growth in raw bitumen production to 3,558 thousand barrels per day in 2025, but at lower prices: WTI at US$68/bbl (down US$6 from 2024-25) with a wider light-heavy differential at US$17.10/bbl. The budget assumes 10% U.S. tariffs on energy products, which creates real uncertainty for your business. On the upside, production continues to expand, the APIP provides $311 million over three years for petrochemicals, and the province's infrastructure investments support continued oilfield activity.

Top Measures That Affect You

1. Raw bitumen production forecast at 3,558 thousand barrels per day in 2025, rising to 3,689K in 2026 and 3,752K in 2027. This sustained production growth underpins demand for oilfield services. Conventional crude oil production is forecast at 519K bbl/day in 2025, declining modestly to 504K by 2027.

2. WTI oil price assumption of US$68/bbl, down from US$74 in 2024-25. WTI is expected to recover modestly to US$71.50/bbl by 2027-28. The light-heavy differential is forecast to widen to US$17.10/bbl in 2025-26, up from US$13.20 in 2024-25. Infrastructure enhancements are expected to narrow it to US$16.50 in 2026-27 and US$15.60 in 2027-28.

U.S. tariff assumption of 10% on energy products as part of the broader 15% tariff baseline on all goods. While demand for Alberta heavy crude is expected to hold up, tariffs create uncertainty for investment decisions and producer margins that directly affect your contract pipeline.

Alberta Petrochemicals Incentive Program (APIP): $311 million over three years. This provides tax credits as capital grants to petrochemical producers, encouraging value-added processing of natural gas in Alberta. Funding is declining as the Heartland Petrochemical Complex project approaches fulfillment.

Orphan Well Association expense at $145 million in 2025-26, growing to $166 million by 2027-28. The cost estimation model has been updated, indicating increases to the industry levy are necessary. This may affect your reclamation and abandonment service lines.

TIER spending of nearly $646 million over three years for emissions reduction, clean technology development, and climate adaptation. TIER covers about 60% of Alberta's total carbon emissions through close to 600 regulated facilities.

New 8% income tax bracket saves your employees up to $750 per year, helping with workforce retention and satisfaction.

Direct Financial Impact

Revenue environment: Provincial resource revenue from bitumen royalties is forecast at $12,830 million in 2025-26, down sharply from $16,859 million in 2024-25 (a 23.9% decline). This reflects the lower WTI and wider differential. Each US$1/bbl change in WTI affects provincial revenues by roughly $750 million. The tighter fiscal environment may constrain provincial willingness to support new incentive programs.

Differential economics: The wider differential at US$17.10/bbl squeezes netback values for producers. The WCS Hardisty price is forecast at CAD$73.10/bbl, down from CAD$84.70 in 2024-25. Tighter producer margins may slow discretionary spending on oilfield services, particularly in conventional operations.

Production growth: Despite lower prices, production continues to grow. Raw bitumen at 3,558K bbl/day and rising through 2027 means continued demand for maintenance, debottlenecking, and field services. The medium-term outlook remains strong.

Exchange rate: The Canadian dollar is forecast at 69.6 US cents, down from 71.7 in 2024-25. The weaker dollar partially offsets the lower WTI by boosting Canadian-dollar revenue for exporters.

Carbon capture: Funding agreements for the Quest and Alberta Carbon Trunk Line projects end in 2025-26. The Alberta Carbon Capture Incentive Program has $173 million forecast over the next three years. TIER continues to provide opportunities for emissions reduction services and credits.

Service Changes

Alberta Energy Regulator (AER): Operating expense at $270 million in 2025-26, up $14 million for additional enterprise projects and staffing. The AER is updating assessments of Alberta's unconventional reserves, which affects regulation, policy development, and royalty calculations. Changes in regulatory requirements affect your compliance and service delivery costs.

Orphan Well Association: The reclamation model has been updated, and the levy collected from industry will need to increase. If you provide well abandonment and reclamation services, the growing expense ($145 million to $166 million by 2027-28) means ongoing demand. Expect the OWA to expedite closure of orphan sites and elimination of liabilities.

Alberta's mineral strategy: The AER is developing Alberta's mineral strategy and conducting the Southern Alberta Groundwater Evaluation. This signals growing interest in diversifying beyond oil and gas, potentially creating new service opportunities.

Energy corridor investments: The Capital Plan includes $2.5 billion for roads and bridges over three years, including highway improvements that serve oil sands access routes. Highway 28 serving the Cold Lake oil sands deposits is getting detailed design work for safety improvements.

Border security: A new Interdiction Patrol Team along the Alberta-U.S. border, while primarily a security measure, reflects the province's approach to the trade relationship that underlies your sector's export market.

What's Missing

No new oilfield service-specific incentive program: Despite the pressure on margins from lower prices and wider differentials, the budget does not introduce targeted incentives for oilfield service companies.

Tariff response limited: The budget assumes a moderate 10% tariff on energy products and factors it into revenue projections, but does not include a specific industry support program if tariffs escalate or persist.

No royalty relief measures: Despite lower prices and wider differentials, the budget does not announce any changes to the royalty framework to support continued investment during the price downturn.

Carbon capture transition unclear: With Quest and ACTL funding agreements ending, the bridge to the Alberta Carbon Capture Incentive Program is not fully clear. If you provide CCS-related services, there may be a gap between the old and new programs.

Workforce development gap: While the budget funds skilled trades programs at $135 million per year, there is no dedicated oil and gas workforce training program. The emphasis is on construction, health care, and technology sectors.

Natural gas price recovery: Natural gas is forecast at $2.50/GJ, double the 2024-25 level of $1.20/GJ. This is positive for gas-weighted producers but the budget does not detail how this affects service demand.

Key Dates

Date	What Happens
January 1, 2025	New 8% tax bracket takes effect for employees
April 1, 2025	New fiscal year and budget allocations begin
2025-26	Tariff baseline of 10% on energy products assumed
2025-26	Quest and ACTL carbon capture funding agreements end
2025-26	APIP continues at $311M over 3 years (declining)
2025-26	OWA expense $145M with updated reclamation model
2025-26 to 2027-28	Bitumen production grows from 3,558K to 3,752K bbl/day
By 2027-28	WTI expected to recover to US$71.50/bbl

Where to Get Help

Alberta Energy Regulator: For regulatory changes, reserve assessments, and compliance requirements, visit aer.ca.

APIP: For petrochemical incentive program details, contact Energy and Minerals or visit alberta.ca/alberta-petrochemicals-incentive-program.

Orphan Well Association: For reclamation program details and the updated levy model, visit orphanwell.ca.

TIER and carbon capture: For emissions reduction programs and carbon capture incentives, contact Environment and Protected Areas.

Invest Alberta: For investment attraction information, contact the Invest Alberta Corporation at investalberta.ca.

Budget documents: Full details at alberta.ca/budget-documents.