The Canadian province of Alberta said on Nov. 8 that new conventional oil wells could be drilled without being subject to government production limits, in a bid to boost its ailing economy.
The change takes effect immediately, the provincial government said in a statement. The broader curtailment policy remains in effect to hold oil production to levels that can be moved through congested export pipelines.
Alberta introduced mandatory production curbs beginning on Jan. 1 this year to reduce a glut of oil in storage and shore up prices. The provincial government said last week that it would allow companies to produce additional oil if they move it by rail.
“Companies are currently making investment decisions and we want those dollars and jobs to be in Alberta,” Alberta Energy Minister Sonya Savage said.
The province, home to most of Canada’s oil production, has been hurt by layoffs from oil producers such as Husky Energy Inc and oilfield service companies which drill wells.
The Alberta government, led by right-leaning Premier Jason Kenney, said last month that its deficit in the 2019-20 fiscal year would increase, reaching C$8.7 billion.
Curtailment still applies to existing producing wells, the government said. The policy affects Alberta’s 16 biggest oil producers, limiting total output to 3.8 million barrels per day (bbl/d) this month.
Canada will see a 10% drop in oilfield wells drilled in 2020, as producers reduce investment, the Petroleum Services Association of Canada forecast last week.
Alberta produced 480,000 bbl/d of conventional crude in September. It accounts for 16% of the province’s oil production, with the vast majority coming from the oil sands, according to the Alberta Energy Regulator.
The change is a boost for Canadian Natural Resources Ltd., the biggest conventional oil producer, as well as Tourmaline Oil Corp., Seven Generations Energy Ltd. and Paramount Resources Ltd., said Tristan Goodman, president of the Explorers and Producers Association of Canada.
“It’s definitely going to result in more wells and more jobs,” Goodman said. “The extent of that is yet to be determined. This is not going to be the start of a boom.”
Even with curtailment limits lifted for new wells, the Canadian oil industry’s larger problem is finding capital to pay for them, he said.
Recommended Reading
Wildcatting is Back: The New Lower 48 Oil Plays
2024-12-15 - Operators wanting to grow oil inventory organically are finding promising potential as modern drilling and completion costs have dropped while adding inventory via M&A is increasingly costly.
China's CNOOC Sells US Assets to Britain's INEOS
2024-12-15 - The Chinese oil and gas major said CNOOC Energy Holdings U.S.A. entered into a sales agreement with a subsidiary of INEOS relating to CNOOC's upstream oil and gas assets in the U.S. part of the Gulf of Mexico.
Venture Global’s Plaquemines LNG Starts Production
2024-12-14 - Venture Global LNG reached a final investment decision on the 20 million metric tons per annum Plaquemines facility 30 months ago.
Partnership to Deploy Clean Frac Fleets Across Permian Basin
2024-12-13 - Diamondback Energy, Halliburton Energy Services and VoltaGrid are working together to deploy four advanced electric simul-frac fleets across the Permian in an effort to enhance clean and efficient energy solutions in the region.
Exclusive: Conduit, Riley Permian Powering Up the Permian
2024-12-13 - Beau Egert, chief commercial officer for Conduit Power, said Riley Exploration Permian is taking control of their own to provide power for their consumption and the community.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.