Western Canada enjoys oil surge

Western Canada’s oil sector is testing new high marks for the 21st Century, with regulators issuing 3,054 licenses for new oil or bitumen wells in the first five months of 2010.

Without that performance, the four provinces would be bracing for a dismal year, with gas well permits at 2,063 compared with the record for the past decade of 8,240 set in 2006, reflecting the mood among operators that gas storage levels will remain high and low prices will persist for a long time as shale gas invades the market.

For the January-May period, operators were awarded permits for 2,213 horizontal wells, compared with 1,088 by the end of May 2009. The previous high for the period was 1,354 in 2006.

Governments across Canada approved 1,034 new well licenses in May, 72 percent better than the same month last year.

For the five months, Alberta approved a total of 4,156 new permits, up 691 from a year earlier, but wells targeting conventional oil prospects surged to 921 from 2008, while the bitumen count increased to 660 from 381.

Saskatchewan has bounced back from a slump last year, issuing 1,436 licenses during the five months, compared with 657 a year ago, but the pull back from gas drilling means the total is below the comparable numbers for the 2003-08 period.

British Columbia, despite soft gas prices, boosted its well count to 440 from 277 last year, making 2010 one of the strongest years in the past two decades, while Manitoba is on track for a record year at 202 permits, 143 ahead of the same time last year.

—Gary Park