Canadian tight oil could alter transportation needs, NEB says
Roughly 500 million barrels of proved and probable reserves identified nationwide
An unexpected surge in Canadian light crude oil brought on by advances in technology and reservoir engineering could eat up spare capacity on pipelines leaving Western Canada sooner than previously thought, a report compiled by the National Energy Board (NEB) suggests.
“New oil supply from tight oil sources has the potential to impact transportation requirements to move [Western Canadian Sedimentary Basin] oil production to market,” the federal regulator says in a winter briefing note on Canada’s tight oil prospects.
The number of drilling rigs targeting tight geological formations – named for their low permeability – in Western Canada jumped from 10 in 2005 to 140 in 2011, the NEB says. The percentage of wells drilled with horizontal legs increased from 28 to 80 over the same period.
Tight oil production, primarily from the Canadian portion of the Bakken, stood at roughly 160,000 barrels per day in early 2011, the NEB says.
That number is sure to increase as 2011 land sales in Alberta, driven by interest in liquids-rich gas in the Duvernay shale but also oil in the Cardium and Viking formations, respectively, surpassed an all-time high of $3.4 billion set in 2006. “It is too early to estimate with any degree of confidence what the ultimate impact of exploiting tight oil plays in Western Canada might be,” the NEB cautions.
But signposts indicate the impact could be significant. Just in Alberta, the Energy Resources Conservation Board estimates that the province’s tight oil plays will add 170,000 barrels per day to conventional light oil production by 2014.
Across Canada, companies have also identified some 500 million barrels of proved and probable reserves, the NEB notes, although data on formation-specific reserves is still lacking. Still, the trend is clear. Repeating a story that has already proved true for shale gas, the NEB anticipates that “technologies used to develop tight oil will continue to evolve, likely increasing the amount of recoverable oil from these plays.”