Land bonanza sweeps Western Canada

What was once raved about as the billion-dollar bonanza has now become the C$4 billion bonanza as sales of government exploration rights have climbed to new heights.

Alberta, British Columbia and Saskatchewan generated C$4.23 billion from land auctions in 2006, easily eclipsing the previous high for the three provinces of C$2.93 billion set last year.

Although British Columbia and Saskatchewan fell short of their benchmark years, Alberta raked in C$3.43 billion, up C$1.17 billion from the 2005 record, fueled by C$1.96 billion in oil sands leases, more than the previous 10 years combined.

Alberta’s land total was 10.45 million acres, compared with 8 million acres last year, including about 3.7 million acres of oil sands rights.

British Columbia totaled C$630 million from successful bids on 1.7 million acres, just under the C$649 million it collected in 2003 when 1.8 million acres was auctioned. Saskatchewan reached C$177 million from 1.12 million acres, second only to its 1994 high of C$199.8 million.

The level of bidding has surprised some at a time when Western Canada is described as the most expensive operating basin in the world and low natural gas prices have caused most leading producers to scale back their exploration programs.

But experts such as Gregg Scott, president of land broker Scott Land & Lease, and FirstEnergy Capital are counting on a strong start to 2007 when the opening Alberta sale offers 99 oil sands parcels which could fetch up to C$200 million.

Scott expects the “extraordinary” pace of land acquisitions to continue next year.

His own company, acting for clients who want to keep their identities under wraps, has been the top land buyer in Western Canada for more than 15 years, beating C$1 billion for the first time in 2006 — a mark that the industry as a whole achieved for the first time in 1980 and struggled to stay above until the turn of the century.

—Gary Park