A squared-off concrete shell sits in a frozen field, a short distance from Highway 63 north of Fort McMurray. It was to be the first building block of the $11.6-billion Voyageur oil sands upgrader, which was taking shape in 2008 as the latest megaproject to inject adrenalin into an Alberta economy that was already riding high on its good fortune.

A half decade later, the concrete shell is still there, but the ebullience is long gone. This week, Suncor Energy Inc. , the oil sands giant that has partnered with Total SA to build Voyageur, took a $1.5-billion writedown on the project – now at imminent risk of cancellation.

The grey slab has all the subtlety of a giant tombstone. "It has been a depressing derelict standing there for years now," says Wayne Prins, provincial director for the Christian Labour Association of Canada (CLAC), representing vast numbers of oil sands workers, who once saw Voyageur as the next ticket on the endless train of long-term prosperous employment.

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The forlorn shell symbolizes the hollowing out of Alberta's hopes and dreams, as it confronts an energy market that has turned dramatically against it. It is a signal of how fast Alberta has fallen, as it tumbles back to the pack of provinces with severe fiscal challenges. The provincial government has just seen $6-billion wiped off its revenues as a result of declining resource income – equivalent to the province's annual education budget.

Alberta has, in the past, seen salvation come in dramatic form: In 1999, it pulled in $2.4-billion in resource revenues. Two years later, $10.6-billion came clattering into a province that was riding a rise in natural gas prices.

But the window appears to be rapidly closing on Alberta's decade-long run, and its dream of being the economic driver of Canada in the 21st century. It may signal the end of the Alberta Advantage that has shifted the economic balance of the country westward. And if Ontario is on the ropes, and Alberta is wobbly, who will lead the country's growth?

Alberta has been here before, at the tail end of energy-fuelled booms that made its people very wealthy, but taught very little about building stable prosperity. Now, it appears to be entering a longer period of more profound decline, and, once again, it is caught unprepared.

"It's amazing how fast it all moved," says David Emerson, the former federal cabinet minister who is now a corporate director and policy thinker based in Vancouver, but who grew up in Grande Prairie, Alta. He was part of a recent task force that was charting a new and ambitious economic strategy for the province – and he now has doubts about the fate of that policy road map.

Mr. Emerson and other economic observers were startled by a cascade of developments, led by last fall's projections by the International Energy Agency (IEA) that the United States, the province's major market, will surge to energy self-sufficiency by 2035, propelled by the country's shale oil and gas boom.

As the U.S. market becomes more daunting, plans for oil pipelines to gain access to growth markets in Asia meet determined resistance, with any prospects for new projects stretching out a decade, if ever. The province seems fated to face continuing steep price discounts, as a captive in an oil-glutted North American market. There is no national consensus on balancing oil sands growth and the environment, and natural gas prices are in the tank for the foreseeable future, as new supply floods the market.

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The bottom line: Being the world's third-largest storehouse of proven oil reserves is not quite so attractive when you face a $25 to $42 discount on every barrel you send into the world.

Mr. Emerson does not go as far to say Alberta's economy has peaked, "but we're past the robust heady days when the going was easy. There are still huge opportunities but it will be harder."

This new reality may have one positive aspect – a rebalancing of the national conversation, as reflected in last week's meeting of the premiers of Alberta and Ontario. If they had met six months ago, the tone would have been very different: Ontario might have scolded Alberta about the pain of a petro-charged dollar; Alberta could have issued a rejoinder on the oil sands' gifts to the national GDP.

But Alberta Premier Alison Redford and Ontario's premier-designate Kathleen Wynne communicated a sense of being partners in pain, two relatively new leaders saddled with excruciating fiscal pressures, and infused with a desire to learn from each other's troubles. Old debates over "Dutch disease" and climate change have not disappeared, but they are overshadowed by a shared fiscal dilemma.

Reflecting the new austerity, Ms. Redford told her Ontario counterpart about her province's foray into results-based budgeting – a process that, she said, "challenges every dollar government spends, while ensuring that programs and services deliver results for Albertans in the most-cost effective way possible."

In a Toronto speech, she emphasized, once again, that all Canadians have a lot riding on Alberta's economic future. A long-term structural decline in the energy industry would touch everything from regional equalization payments to jobs for underemployed workers from other regions.

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This week, federal Finance Minister Jim Flaherty expressed concern about the impact of oil price woes on his own budget planning. A clearer picture of the oil patch malaise will emerge in the coming week, amid a raft of energy company earnings – reports on corporate health that now carry national resonance. Like it or not, Canadians' standard of living is directly linked to Alberta's success in selling its energy to the rest of the world.

"Canadians have not developed an acute appreciation of the extent to which our fiscal situation is dependent on the Alberta growth factor and the natural resource revenues," Mr. Emerson says.

He is particularly aware of what's at stake, as part of a talented collection of policy wonks who produced a blueprint for how Alberta could get off the dizzying roller coaster of oil and gas cycles and propel itself toward sustainable economic growth.

The Premier's Council for Economic Strategy, which reported in May, 2011, after 2 1/2 years of study, charted a path to divert more of the province's non-renewable oil and gas bounty to such things as advanced technologies, water renewal and clean energy. Diversification has always been an elusive dream in Alberta, but the mood was buoyant when Mr. Emerson, the council's chairman, presented the plan. The energy economy was booming and there was time and money to put this strategy into place.

More than 20 months later, he is growing pessimistic that, given competing claims for dwindling revenues and capital budgets, the exercise will bear results. "I wouldn't say it is too late, but it is getting late," says Mr. Emerson – although Alberta officials insist the report will be part of the input for the province's Economic Summit to be held Saturday.

Michael Percy, professor and past dean of the University of Alberta business school – and a former provincial MLA – is most alarmed over the transportation bottlenecks that isolate Alberta from key markets, including the United States. "The IEA did say that every barrel of oil produced in Alberta will be required, it just didn't say how we would sell it," he says.

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Capital markets, particularly foreign investors, echo this frustration. Crescent Point Energy Corp., once an energy sector darling, has seen U.S. investors fall from 35 to 22 per cent of its shareholder base in the past year. Oil sands companies say similar factors have kept their stocks depressed, owing in part to a coolness from south of the border that dates as far back as 2009.

"There has been a loss of faith in the economics that are being presented by the producers here," said John Rogers, vice-president of investor relations with MEG Energy Corp. Pipeline problems are largely to blame. "They think we have a lot of trapped oil up here in Alberta," he said. "They think we're just on the wrong end of the pipe. They think [price] differentials are absolutely going to slaughter us."

Still, he holds out some hope, since investors tend to flock to a deal – and in public markets today, the oil sands presents plenty of potential bargains.

Of course, any economic fallout from the energy crisis could, in time, be partly balanced by some recovery of manufacturing in Central Canada and the growth of, say, B.C. and Quebec mining or Newfoundland offshore energy. Premier Redford talked of the potential for value-added agriculture, as well as water and wind. But manufacturing, in particular, still faces competitive challenges and draws benefits from the oil and gas industry's spinoffs. And none of these sectors is ready, or large enough, to fill the gap left by a stagnant energy sector. Saskatchewan, the other economic driver in the West, is another commodity-reliant province, much like Alberta.

Alberta will not fade away, and short-term setbacks could be eased by a return to, say, $5 (U.S.) per thousand cubic feet of natural gas and a lustily resurgent U.S. economy that soaks up oil gluts. The province has always ridden the cycles, and indeed there is a stubborn pride in the boom and bust culture of high public and private spending in good times and restraint during the inevitable pullbacks.

"If you look at per capita government expenditures, it is clear that revenues drive expenditures. That is an enduring feature [of Alberta]," says Mr. Percy, who is optimistic that the current provincial government has learned enough from past cycles to manage the current crisis.

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To some extent, the sense of urgency is undercut because the economic signals are still contradictory. Out in the field, there is little evidence yet of a slowdown. In 2012, the CLAC represented more than 10,000 workers in the Wood Buffalo region where most of the oil sands is located. That was a new record, surpassing the previous peak of 8,600 in 2008. CLAC expects to add a further 15 per cent in 2013. Worker shortages are acute enough that Mr. Prins suggests a reporter "put down the pen and pick up a wrench."

But elsewhere, the signs of a downturn have already appeared: Talisman Energy Inc. is slashing its office expenditures this year by some 20 per cent. At least some of that will come from cutting jobs, and rumours of impending work force cuts at other companies abound in Calgary. And now, the CLAC's Mr. Prins acknowledges that the spectre of Voyageur is an ominous one. "It's not altogether doom and gloom, but it's certainly a warning that a slowdown in the industry in general isn't out of the equation."

What's more, Alberta's track record in managing its bouts of economic whiplash is not promising. In the past, when a boom would end, there would be a resolve that hard-headed realism would assert itself the next time around. It never did. Indeed, the classic Alberta bumper sticker of the 1980s was "Please God, let there be another oil boom. I promise not to piss it all away next time." But the danger now is that there will be progressively less to piss away each time, as energy returns keep getting smaller and smaller.

The heritage of short-term thinking was never far from the minds of Mr. Emerson's panel – with the likes of former Bank of Canada governor David Dodge, a duo of Oxford scholars and a Boston venture capitalist. But committee member James Gray, a veteran Calgary oilman and long-time policy observer, said the report faced an immediate hurdle because it was identified with former premier Ed Stelmach, who left office and was replaced by Ms. Redford.

Yet Mr. Gray insists there was much in the document to commend, including the concept of pushing the province's policy emphasis from overspending current resource revenues to investing in ideas to enrich succeeding generations. "We've solved problems with money and not with ideas and vision," he says. Alberta's success so far has been the result of a fortunate inheritance. "We woke up one morning and, goddamn it, we were so smart because all these resources were in our control and we thought our brains put us in that position. I'm sorry, but that was not the case."

That reality hit home in October, he says, when the normally flat differential between the price of West Texas intermediate crude and Western Canadian heavy oil suddenly soared, slashing the per barrel revenue of Alberta producers. "It crashed in the last 90 days and no one saw it coming."

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The result is a severe economic challenge, which, he says, might finally force Alberta to face facts. "I see this as an opportunity. We were getting soft and our entitlements were getting big. We were fat, saucy and arrogant and we had to have our chain yanked. "

Mr. Emerson, who ran a Western Canadian bank in the storm-tossed 1980s, also hopes for a new realism, but he knows ingrained behaviours are hard to overcome. And this time, Alberta is facing a large structural adjustment as well as a cyclical downturn. There is still time to make the policy moves – and sacrifices – to build a post-hydrocarbon economy, he believes, but "we are a little late in the game, and we were not prepared for the changes taking place."