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Western Canada is traditionally associated with oil and gas production but in truth, all provinces and territories have commercial production or have identified the existence of potential reservoirs.[1] Many wrongly believe that the first oil well was Edwin Drake’s 1858 well in Pennsylvania, but in fact, the first commercial oil well in history was in Oil Springs, Ontario in 1857. Oil production in Canada is older than the country itself! [2]
Canada is one of the largest oil and gas producers in the world. We are currently the 6th largest producer of oil and the 5th largest producer of natural gas. Our reserves of 171 billion barrels of oil are also the 3rd largest in the world. [1]
Most of our oil production today comes from the oil sands, but historically the country produced a lot of conventional crude. In 1973, we reached peak conventional production of 1.74 million barrels of oil per day. After 1973, conventional oil production plateaued nationally while declining in Alberta. [3] In 2010, the trend started to reverse thanks to horizontal drilling and multi-stage fracturing with conventional production from Alberta increasing by nearly 130,000 bbl/d and Saskatchewan production increasing by nearly 65,000 bbl/d. However, this growth was to be shortlived. The 2014 crash in oil prices has had a visible impact on production, resulting in a national drop of approximately 140,000 bbl/d over the following year.
Turn on and off each series by clicking on the text in the legend.
The decline in conventional crude from its peak in 1973 was more than offset by the strong growth in oil sands production which first became commercial in 1967. By 2001 total bitumen production exceeded conventional crude production for the first time. Impressively, by 2015, oil sands production would be more than 4 times greater than Alberta’s conventional production.
Unlike conventional oil, Canada’s natural gas production has not yet reached its peak production rate. We can however observe the effects of the 2007 drop in gas prices which decreased Canadian gas production by 17% over the 5 years that followed. By 2013, we saw gas production begin to increase again as production companies become more adept at drilling and producing from shale gas reservoirs. [3]
Commodity price shocks are by no means a recent phenomena for the industry. According to Goldman Sachs, the first oil price crash was in 1865 after the U.S. Civil War ended. The price of a barrel went from $120 (inflation adjusted) to $40 [4]. While it is interesting to note production decline following a crash, such trends are minor compared to the production growth observed in long term data. The overwhelming trend for Canada over the last 75 years has been one of impressive growth, which is a testament to the country’s rich natural resources and the ingenuity of its people.
Note: The data used in these charts was obtained from CAPP’s statistical handbook and the Newfoundland Provincial website
[1] Canada’s Petroleum Resources, Canadian Association of Petroleum Producers
[2] The First Oil Well In History , Hashabi Fathi, Laval University (2000)
[3] Production data from provinces not listed (ie. Newfoundland, Quebec, etc) is included in the Canada data series.
[4] History of crude oil prices, Goldman Sachs (2014). Re-published by Business Insider
Submitted by Kevin McCormack and Petro Niche Technology Ltd.