Alberta, Canada, is experiencing an uptick in prosperity because of the unconventional resource development being spurred by encouraging drilling incentives recently introduced.

Speaking at Hart Energy’s inaugural DUG Canada 2012 conference, Alberta’s premier, Alison Redford, told more than 900 attendees that Calgary, the city hosting the event, is leading the charge, becoming more industrious and adding to Alberta’s coffers while the oil and gas industry propels unconventional resource development forward.

“We’re seeing such tremendous opportunity and investment in our province that it really does require us to take pause and think about how fortunate we are to live in a jurisdiction with the resources that we do,” she said.

“We all know that life is about change,” Redford continued, “and this is particularly true in the world of unconventional energy development. The unlocking of shale gas has redefined the North American natural gas market.”

According to the premier, unconventional resource development has the potential to make significant contributions to Alberta’s future natural gas supply because advancements in drilling and completion technologies allow for the cost-effective development of more shale-gas resources.

About 11 Bcf per day of natural gas was produced in Alberta in 2010. However, shale-gas development in the province is still in its early stages, Redford said, with 250 producing shale gas connections made in 2009.

“Development activities have been mainly concentrated in East Central Alberta with the Colorado-group shales,” but interest is growing in plays such as the Duvernay and Muskwa formations, she said.

Redford addressed risks facing Canada’s natural gas market because of an abundance of gas supplies in North America. Historically, natural gas prices have been cyclical, and the Alberta government “has never relied on the revenue from one particular natural resource to build the infrastructure and to provide the services that Alberta has come to expect,” she stated. But natural gas production was once the great driver of provincial resource revenues, C$8.4 billion in royalties generated by Alberta alone in 2005, representing just less than 60% of the province’s resource revenues. “In 2011 to 2012, that’s fallen to just over a billion dollars—just 10% of all of our resource revenues,” she said.

The most recent drop in natural gas prices “has persisted to the point where we have to consider this, from our perspective, to be the new normal,” she noted. As a result of steep price declines from $8 per gigajoule (GJ) in 2005 to the current AECO price of $1.65- to $2 per GJ, natural gas producers are experiencing “challenging times.”

“This prolonged slump occasioned by massive new sources of supply will mean that the industry will continue to experience some of the challenges that it has over the past few months,” Redford said.

Meanwhile, Alberta producers risk losing traditional markets to the American Midwest and Northeast, she added, in addition to domestic markets if the flow of the TransCanada pipeline, one of the larger export points in southern Ontario, is reversed to transport gas from the U.S. to Ontario as opposed to carrying Alberta gas to the Northeast U.S.

Notwithstanding these challenges facing the industry, the Alberta government remains committed to its natural gas producers, Redford said, and will ensure they can operate in an efficient, profitable and responsible manner. Canada also has many positive operating advantages, including lowest overall taxes, simple, high-quality regulation, availability of infrastructure, a highly skilled workforce, proximity to U.S. markets and an untapped opportunity to export LNG to Asian markets, she said.

Meanwhile, the quality of life that Albertans have come to expect is buoyed by an industry that continues to reinvest in the province’s growth. “We are committed to ensuring that you have the certainty that you need to continue to succeed so that we as a province can continue to succeed,” Redford said. And despite certain international uncertainties surrounding economic recovery across the globe, “Alberta continues to be in a strong position.”

According to Redford, the province’s conventional natural gas industry is expected to contribute between $746 billion and $861 billion of gross domestic product to the Albertan and Canadian economies, respectively, during the next 25 years. And, for the first time in provincial history, Alberta exceeded $3 billion in petroleum and natural gas land sales for calendar year 2011. The record land sales were the result of new drilling initiatives introduced by the Alberta government to encourage developing unconventional and challenging reservoirs, including tight gas, shale gas and coalbed methane.

Looking ahead, the Alberta premier sees activity focused more on drilling rather than acquiring land, supported by the government’s strong regulatory framework. “Even still, we’re expecting higher-than-average land sales of $2 billion in 2012 to 2013,” she said.

Redford also acknowledged the work that the Canadian Society of Unconventional Resources, has done in the last 10 years to encourage the resource-rich country’s unconventional energy development.

“A 10th-year anniversary at a time of uncertain circumstances is something to be proud of,” she said. “The efforts to increase awareness about unconventional resources in Canada have been instrumental in the development of a flourishing energy industry.”