BY DAN HEALING, CALGARY HERALD JUNE 8, 2011 10:00 PM
Conventional oil grabbed the headline on the Alberta energy industry regulator's annual production report Wednesday but its future role is still expected to be dwarfed by the oilsands.
The Alberta Energy Resources Conservation Board noted that 2,300 successful oil wells were drilled in 2010, more than double the number in 2009, as higher oil prices boosted spending plans while low natural gas prices resulted in gas exploration cuts.
More drilling and new recovery technologies, meanwhile, allowed reserves of unproduced crude oil to increase by 3.7 per cent in 2010, the first positive number in five years. "There's more oil drilling going on than there has been for several years," said ERCB spokesman Bob Curran. "As drilling occurs, reserves get booked because what the drilling does is delineates the reserve or resource that's there.
"So more drilling makes more reserves."
The report predicted, however, that the province will be pumping 3.5 million barrels of bitumen per day from the oilsands by 2020, more than 90 per cent of its total expected oil output of 3.8 million bpd, as conventional crude resumes its long downward spiral.
A recent forecast by the industry group Canadian Association of Petroleum Producers predicted total Canadian production of oil will hit 4.2 million barrels per day by 2020 with three billion of that from the oilsands.
"Simply put, the economics are in the oil," said Robert Cooper, vice-president of energy research for Mackie Research Capital, explaining the rush to oil drilling in 2010. "Assuming these prices stay, you'll see western Canadian junior producers focus virtually exclusively on liquids-rich gas and oil projects and you'll see big producers able to take a more diversified stance."
Cooper said technologies such as horizontal drilling combined with multi-stage hydraulic fracturing are allowing companies to recover oil from existing pools that had been thought tapped out.
But no new pools are being discovered.
"Outside the oilsands, it's hard to build a real sizable oil producer in Western Canada," he said.
The ERCB based its analysis on an average West Texas Intermediate crude oil price that will steadily rise from $100 US per barrel this year to an average of $110 by the year 2020.
Natural gas sold in Canada is expected to average $3.50 per gigajoule in 2011 and increase to $7 by 2020.
The report forecasts that 2,800 wells will be drilled and placed in production annually over the next three years, dropping to 2,500 from 2014 to 2020.
In 2010, crude oil production in Alberta totalled 459,000 bpd, a 0.4 per cent reduction from 2009.
Also in 2010, Alberta produced 1.6 million bpd of raw crude bitumen -an eight per cent increase over the previous year.
An updated total reserves number for Alberta is 170.8 billion barrels, consisting of 169.3 billion barrels of bitumen and just 1.5 billion barrels of conventional crude oil.
The province has conventional gas reserves of 36.4 trillion cubic feet, the ERCB noted.
