There is strong potential for increased oil development and recovery in Alberta, but it won't be pursued under present fiscal rules, says Imperial Oil Ltd.
The company, in a submission to an economic planning conference sponsored by the Alberta government, said increased conventional oil recovery will require a change in economics. Higher recovery rates can't be pursued profitably now at prices less than $30/bbl when current royalties amount to $8/bbl and taxes $2/bbl, all in U.S. dollars.
Imperial said there is substantial conventional oil potential in the short term. In the medium term, technology can increase recovery rates of existing reserves. In the long term, Imperial will focus on oilsands and heavy oil development.
The company said industry currently expects to recover 30.5% of oil in place. Raising the recovery rate to 34% would add 2 billion bbl to recoverable reserves.
Imperial's Maureen Bradbury said Alberta's current policies do not produce more royalty revenues because they do not encourage development.
The company said Alberta's current royalties ensure that remaining crude reserves, estimated at a 9 year supply at current production, will not be replaced by development.
The 9 year remaining conventional crude reserve of 2.9 billion bbl was estimated to the end of 1991 in a report by Alberta's Energy Resources Conservation Board (OGJ, June 1, p. 32). However, ERCB said almost half of a 1991 decline of 264 million bbl was accounted for by a reassessment of reserves totaling 126 million bbl for previous overbookings.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
