Technology gives western Canadian conventional crude production a boost

Declines switch to increases on horizontal drilling

CALGARY — Conventional oil has made a comeback in Western Canada, rebounding from almost a decade of declining production to boost overall supply along with growing bitumen volumes.

By 2025 conventional crude will add about 200,000 barrels per day out of 400,000 bpd additional volumes added to last year’s forecast, according to the Canadian Association of Petroleum Producers.

The association now expects total Canadian oil production to reach 4.7 million barrels per day, from 2.8 million produced last year.

About half of the increase comes at the tail end of the 15-year forecast from new oilsands projects. The surprise for CAPP was evidence of a resurgence in conventional oil at the front of the prediction time span.

“What’s interesting to us is that it’s the first time in about a decade that we’ve seen a reversal in the decline that’s been the maturing nature of the western basin,” said Greg Stringham, CAPP vice-president of marketing.

The resurgence could be even stronger than the association had calculated, based on the surprising results of Wednesday’s provincial land sale, Stringham said.

Producers shelled out a record-breaking $842 million for oil and gas licences, almost double the provincial take to date and including a $107 million for a township-sized chunk of land northwest of Red Deer.

Stringham attributed the rise in conventional production to the use of new technologies on older fields on the back of strong oil prices and favourable royalty changes in Alberta.

Despite the increase, conventional oil production in Western Canada will decline to around 860,000 barrels per day by 2025, from 1.08 million bpd in 2010, according to the report.

Oilsands production will increase to 3.73 million bpd from 1.47 million bpd during the same time frame.

Also on Wednesday, a major international report identified Canada as having the most stable and secure energy supplies for the short-term.

In contrast, the energy security index developed by British risk analysis and mapping firm Maplecroft Inc. categorized fellow G7 members, France, Germany, Italy, Japan, UK and USA as ‘high risk’ countries.

The index compares assesses immediate risks to the availability, affordability and continuity of energy supplies in 196 countries.