Global oil prices have wreaked havoc with the Alberta economy in the past five years. To make matters worse, pipeline capacity constraints have put a severe limit on oil shipments, forcing an additional deep discount on Alberta oil. It has heated up the debate on creating more oil transportation capacity and opening up new markets for the stuff. It has also resurrected the D-word: yes, these are the exact conditions that get everyone talking diversification… again. Is it just a passing fad, another Alberta fling with an episodic but purely intellectual notion?

The dominance of oil and gas in Alberta exports is gripping. Crude oil and gas exports alone count for two-thirds of all shipments, and that has actually risen from an already-high 58% at the start of the new millennium. Layer in exports from refineries and petrochemical manufacturing, and it’s getting close to the overall export dependence level Canada has on the U.S. market. It’s big. So, is it really worth getting back into the diversification debate?

Well, let’s first have a look at what else Alberta does. Among its top 25 exports of goods to the rest of the world are a range of food products, chemicals , forest products, machinery, and of course there are the higher value-added petrochemical industries. This is where the potential, if any, for diversification lies. Is there a case?

Let’s start with the oil and gas sector itself. Adding value to the province’s key resource is a form of first-line diversification: do more with it before shipping it out, add value that boosts the domestic payback. There is a case. While shipments of crude oil and gas have languished in recent years, shipments from refineries have risen at an average rate of over 11%. For petroleum manufacturing, an equally impressive 9%. Run at this rate for another 10 years, and you take the share of these two from barely 5% of goods exports to 9%. It seems small, yet it’s significant, and it’s a start.

But it sure doesn’t have to end there. Lump together the top categories in Alberta’s agri-food sector, and you get another 8% of goods exports. This includes key crops like wheat and oilseeds, but also live and processed animals, and frozen food manufacturing, among others. The share hasn’t really changed over the years, though; growth has been pretty much on average. So is there really a story here?

In fact, there is. Emerging market demand for foodstuffs of all kinds is rising significantly. The rise of the emerging market middle class is creating hot demand for protein, and buyers are sidling up to the large net exporters of the world. China is perhaps the biggest suitor, and, for the moment, presents the most promising long-term market. Interestingly, Alberta is not really shipping to China in a big way, which at first glance is discouraging, but at second glance, a great opportunity. Net dependence figures from the FAO suggest that if it joined the fray, Alberta could see its food exports become something of an export powerhouse. If exports could manage to get up to collective annual growth of 15%—not out of line with certain projections of need—the sector would jump in importance to about 22% of provincial exports.

There’s more. Alberta is cracking in to the Chinese appetite for its forest products. Pulp shipments to the U.S. have gone nowhere in the past two decades, but they have simultaneously maintained a blistering annual growth track to China of 16%. That’s enough that shipments to China will eclipse U.S.-bound pulp in just over three years, for rolled-up overall growth of over 9% annually. It’s a small category, but it’s well over average, and a demonstration of real-time diversification.

There’s more to say, maybe for another time. For the moment, it’s clear that there is a diversification dynamic in Alberta that could well transform the export picture in the coming decade.

The bottom line?

Alberta’s concentration in oil and gas mirror’s Canada’s dependence on the US market. In both cases, analysts are generally resigned to this as a permanent reality. What the numbers show in both is that diversification can happen, is happening, and is rewarding those who are buying in.


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