By OGJ editors
HOUSTON, Nov. 9 -- Finding and development costs for natural gas and conventional oil in Western Canada, excluding revisions, have increased 12% to $2.40/Mcf during 2004 compared with the previous year, according to Ziff Energy Group, Calgary.
The increase primarily is attributed to smaller recoveries from new gas and oil wells, Ziff said in its annual Western Canada F&D and Reserve Replacement Cost study.
Within 8 regional gas strategy areas, 3-year F&D costs were $1.70-3.00/Mcf, and in 5 oil strategy areas, F&D costs were $9-15/bbl. The study found increases in F&D costs for each strategy during the last 5 years.
The energy trust sector has grown significantly through both acquisitions and company conversions since 2001. The study said that trusts account for more than 20% of Western Canada production (over 30% of conventional oil).
In 2004, trusts spent $6 billion on acquisitions and about $2 billion on F&D. Many trusts are converting nonproducing assets to producing assets. Faced with the high cost of acquisitions, trusts are adding technical staff and exploiting opportunities on their existing properties, the study said.
Gas reserve replacement responded to record gas drilling levels, with more than 125% replacement for gas in 2004, Ziff said.
Oil reserve replacement reached 105%, marking the first time in 4 years of full oil replacement. Heavy oil drilling represented almost half of all oil wells drilled.
