Market Snapshot: Canadian Tight Oil Production Update

Release Date: 2014-10-22

In December 2011, the NEB released an Energy Briefing Note entitled Tight Oil Developments in the Western Canada Sedimentary Basin. This Market Snapshot provides a brief update on Canadian tight oil production trends.

“Tight oil” or “light tight oil” refers to a recent trend where horizontal drilling and multi-stage hydraulic fracturing are applied to very low permeability light oil reservoirs.

In early 2014, production of light tight oil in western Canada had grown to more than 400,000 barrels per day (64 000 cubic metres per day), doubling from early 2011. Also, a few new plays have been targeted by industry since 2011.

The growth rate of tight oil production has been slowing. In March 2012, production was 127,000 barrels per day (20 000 cubic metres per day) higher than the previous March. By April 2014, this growth had slowed to 33,000 barrels per day (5 300 cubic metres per day) year over year. The number of new wells added each month has been declining slightly since mid-2012, and a growing proportion of new wells are in the Viking Formation, which produce at somewhat lower rates than other tight oil plays, thus less production is being added overall.

Figure Sources and Description

Sources: Divestco data, NEB calculations

Description: This stacked cake chart shows Western Canadian tight oil production by play, from 2005 to early 2014. Tight oil production grows from near zero in 2005, with production from 15 plays. These are the Bakken, Bakken/Torquay, Torquay, Shaunavon, Lower Amaranth, Cardium, Viking, Montney/Doig, Pekisko,Beaverhill Lake,Slave Point,Charlie Lake/Halfway, Exshaw, Belly River, and Dunvegan. Of these, larger amounts of production come from the Bakken, Cardium and Viking plays. Also, overlaying the cake chart is a line, representing year over year production growth. This line grows until early 2012, at which point it begins to decline.


Total Western Canadian light oil production (excluding condensate) rose to from 500,000 barrels per day (79 000 cubic metres per day) in mid-2011 to 755,000 barrels per day (120 000 cubic metres per day) by the beginning of 2014, over 50 per cent of which was tight oil.

Figure Sources and Description

Sources: Divestco data, NEB data and calculations

Description: This stacked cake chart shows Western Canadian light oil production (conventional and tight oil) from 1998 to early 2014. Conventional oil production declines steadily from 1998 to 2014. Tight oil production is zero until 2005, and grows thereafter. By early 2014, tight oil represents a majority of Western Canadian light oil production.

 

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