In the latest quarter, resource revenue was below budget by $503 million.
Alberta's finance minister provided an update Tuesday on the province's bleak financial situation, describing it as challenging, even though the government is still forecasting a surplus for the 2014-15 year of $465 million.
"It won't be easy, it won't be overnight and it won't be painless," said Finance Minister Robin Campbell about overcoming the government's financial challenges.
Several analysts and energy-sector CEOs say the price of oil has likely hit bottom and will slowly increase over the rest of the year.
Prices have fallen by about 50 per cent in the last year. West Texas Intermediate crude, the most commonly traded North American contract, was down $1.47 to $49.34 US at the close of trading Monday, following fresh reports of an oversupply of oil.
The Alberta government was basing its 2014-2015 budget on an average WTI oil price of $95 US. During the second quarter, the forecast was lowered to $79 US. The government has once again revised that figure for the current quarter to $44.
"I won't forecast the price of oil, I've given up on that," said Campbell.
This year, Alberta's revenue from oilsands bitumen royalties are expected to drop $644 million below the budget forecast.
The steep drop in oil prices has hit Alberta's energy sector hard.
Several companies have announced layoffs, cut capital spending and delayed projects, including Monday's announcement by Shell Canada to back out of the Pierre River oilsands project.
Oil and gas investment is expected to decline by 30 per cent in 2015, according to the government, due to lower oil prices.
Alberta isn't the only province struggling because of oil's woes. The Conference Board of Canada suggests Saskatchewan, and Newfoundland and Labrador will also take a hit.
Alberta is considering many options to boost revenues, including increasing taxes and reintroducing health-care premiums.
The government has taken several steps to cut costs. Alberta trade offices will close in Ottawa, Chicago and Munich. All MLAs have agreed to a five per cent wage cut. Alberta Health Services has brought in a hiring and salary freeze.
Alberta has yet to set a date for when the next budget will be delivered.
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