Discoveries, drilling give boost to Canada's oil reserves

Significant gains in B.C. natural gas reserves and East Coast oil totals are keeping Canada's petroleum resources in the black, says the Canadian Association of Petroleum Producers (CAPP).

CAPP's 2004 petroleum reserves estimate revealed a net increase in Canada's crude oil and equivalent reserves of 200 million barrels to 12.2 billion barrels, while new reserves of natural gas largely replaced production and sustained reserves at 56.5 trillion cubic feet (tcf) - a drop of just one billion cubic feet.

"The good news is that people were expecting with the high drilling (in 2004) that we were going to be able to replace reserves on oil and gas, and that's what happened," says Greg Stringham, CAPP vice-president of markets and fiscal policy.

He says what jumped out at him from the CAPP data was a "massive" increase in B.C.'s natural gas reserves to the tune of one tcf, and in offshore Newfoundland the recognition of the White Rose oil reserves - which operator Husky Energy Ltd. just started to produce two weeks ago - that has helped to increase Canada's total conventional oil reserves by 2.3 per cent to 4.4 billion barrels.

"There are huge, huge finds (in B.C.), which means the basin is extending out of Alberta and into B.C. now, as it has been, but there are some big finds to be found so it's not just a shallow gas story," Stringham says.

With regards to Newfoundland, the CAPP vice-president predicts that once White Rose hits its stride next year, oil production from the Maritime province will equal that of Saskatchewan.

The association says a lack of major new oilsands projects in 2004 kept reserves associated with active mining projects flat at 5.3 billion barrels, while in-situ projects increased reserves marginally to 2.1 billion barrels.

Oilsands account for about 60 per cent of total crude oil and equivalent reserves, CAPP notes.

"We have 20-30 per cent natural declines each year that we have to make up. So that really means we have to continue to spend and drill at record levels," Stringham says.

CAPP forecasts that 24,500 wells will be drilled next year, and that total capital spending will rise to $39 billion from $37 billion in 2005.

Of 2006 projected spending, more than $30 billion will go toward conventional oil and gas operations (including offshore) and the remainder on oilsands.