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June 2008

Vol. 13, No. 24 Week of June 15, 2008

Alberta crude, gas reserves in decline

Gary Park

For Petroleum News

Established reserves of conventional crude oil and natural gas continued their downward trend in Alberta last year, while bitumen was virtually unchanged, the province’s Energy Resources Conservation Board reported.

Conventional crude, after production of 191 million barrels in 2007, was down a net 6.3 percent to 1.5 billion remaining barrels, putting them at less than one-fifth of the peak 7.7 billion barrels in 1969. However, the ultimate potential, which depends on technological advances and commodity prices, is rated at 19.7 billion barrels.

Natural gas slipped 3.7 percent to 3.9 trillion cubic feet after producing 4.8 tcf last year. Ultimate potential, excluding coalbed methane, is estimated at 223 tcf.

Bitumen output of 482 million barrels made scarcely a dent in the established bitumen reserves of 173 billion barrels, with ultimate potential calculated at 315 billion barrels.

Production from both mining and in-situ bitumen projects rose 5.2 percent in 2007 to 1.32 million barrels per day, while conventional crude was off almost 20,000 bpd at 523,000 bpd and gas volumes dropped about 265 million cubic feet per day to 13.15 billion cubic feet per day, according to the ERCB’s annual report.

Bitumen now accounts for 72 percent of Alberta’s crude oil and equivalent production and is forecast by the ERCB to reach 3.4 million bpd by 2017, when upgrading is expected to turn 70 percent into 2 million bpd of synthetic oil.

Last year 62 percent of all bitumen production was upgrading, yielding 688,000 bpd of synthetic crude.

Alberta had 8,900 producing in-situ bitumen wells last year compared with 2,300 in 1990, with production over the period rising to 500,000 bpd from 135,000 bpd.

Exploratory and development drilling for crude oil, along with enhanced recovery projects, added 130 million new barrels to the province’s reserves last year, replacing only 68 percent of production, down from the previous year’s 79 percent.

The report noted that the number of producing oil wells placed on production dropped 11 percent in 2007 to 1,745, while successful oil wells drilled were off 17 percent to 1,791.

Natural gas reserves from new drilling replaced only 51 percent of production, down from 68 percent in 2006.

Total gas output, including coalbed methane, fell 2.4 percent in 2007 and the ERCB is forecasting a 3.3 percent annual decline through 2016.

Output from coalbed methane wells was up 44 percent to 660 million cubic feet per day and is predicted to reach about 1.75 billion cubic feet per day by 2017, although those volumes could be higher if development of the wet Mannville coals is accelerated.

The ERCB forecasts WTI crude will average $105 per barrel this year and rise steadily to $138 per barrel in 2017, while Alberta plant gate gas prices are predicted to average C$8 per gigajoule this year and C$9.05 in 2017.






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