Alberta energy companies are shifting their focus to other provinces and even countries. But that’s not necessarily a bad thing
by Tricia Radison
Over the last couple of years, Western Canada’s oil and gas industry has undergone a significant and somewhat surprising growth spurt. In British Columbia, a number of natural gas deposits, including Montney and the Horn River Basin, have ignited fervour within the industry. Bonuses from land sales have skyrocketed, going from $630 million in 2006 to $1.05 billion in 2007, with $929 million of that due to activity in the gas sector alone.
And despite the downturn in the latter part of last year, Saskatchewan also reported excellent numbers for 2008. The province saw 4,045 oil and gas wells drilled last year, 17% more than 2007 and the highest number since 2003, when a record-setting 4,195 wells were drilled. Nearly 1,400 of them tapped the Bakken Formation, a source of conventional oil in the southeast part of the province that’s currently considered one of the hottest plays on the continent.
While low commodity prices will dampen the excitement in 2009, the two provinces are still expected to fare better than Alberta. The Petroleum Services Association of Canada recently reported that while drilling in this province in 2009 is expected to fall by 27% from 2008 levels, B.C. will see an increase of 7%. Saskatchewan will experience a decline in drilling, too, but at only 5%, the damage will be much less than in Alberta.
While Alberta’s oil and gas companies may not yet be responding by packing up and moving out, they’re spending more time and more money out of province. Extraction technology has advanced and royalty structures have changed, leaving plays like Montney, Horn River and Bakken more economically viable than ever. How new opportunities like these, and those farther afield, help bottom lines will depend partly on how well companies handle the logistical challenges posed by the plays. In turn, how those opportunities affect the provincial economy may depend on how well the Alberta business environment works to prevent the relocation of corporate headquarters, and the dollars and talent they attract.
“In the oilsands industry, it is imperative to have Alberta’s experience,” says Christopher Hopkins, founder, director and CEO of Oilsands Quest Inc., a Calgary-based oilsands exploration and development company currently developing the first oilsands discovery in northwestern Saskatchewan.
Getting bitumen out of oilsands is always an expensive proposition. The challenges are compounded when you have to create a brand new provincial industry and build the massive infrastructure required to support what has become perhaps the largest employer in the region.
“We do things right the first time because of our experience. We don’t make a whole lot of mistakes,” says Hopkins. As a result, Oilsands Quest has been able to move forward much more quickly than anyone expected.
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