What kind of production impacts might we expect in Western Canada in 2016? To gauge this we need to forecast 2016 drilling activity, compare that to 2015 drilling activity and measure the impacts that 2015 reduced drilling had on production. My drilling activity forecast for 2016 is 3909 wells. That would be a 41% reduction from 2015 drilling activity and a 73% reduction since 2014. (Note: the 2016 forecast used the same method as my 2015 drilling forecast, which was within 4% of actual drilling results).
Production Impacts of Reduced Drilling
The reduction in drilling in 2015 yielded a surprising twist… the Spirit River formation added more new gas production than the Montney. The Spirit River formation accounted for 39% of new gas production in 2015 (with 246 wells coming on with gas production) ahead of the Montney which accounted for 33% of new gas production (with 304 wells coming on with gas production). The results are based on “Projected Formation” with the following formations grouped together as Spirit River: Notikewin, Falher, Wilrich and Spirit River. See www.formationfinder.com/ab/. Gas production in WCSB exited 2015 at 18.75 bcf/day, a drop of only 2%. The 2015 production additions almost offset the 23.8% decline of pre-2015 gas production.
New oil production from non-oil sands was dominated by Viking with 23.3% of 2015’s new oil production (with 792 wells coming on production). Oil sands saw a 28% increase in production and now represent 52% of Western Canada’s total oil production. Pre-2015 oil production declined 11%. The net result was a 6% increase in total oil production in Western Canada, exiting 2015 at 2,461,211 bbl/day.
The Total BOE production of Western Canada saw only a 0.5% decrease in 2015. However, with less drilling, combined with potential wildfire impacts on oil sands production, we can expect a much larger decrease in Western Canadian production in 2016.
Production data: IHS Information Hub
Thanks for reading. We welcome your questions and suggestions for future blogs.
Some other blogs you may find of interest:
- Oil Sands Production Will Attenuate Impact of Reduced Drilling
- IWCP Non-compliant Wells Will Cost More Than $320 Million
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