Canadian industry broke records during '97

Canadian crude oil and liquids production reached a record 2.1 million b/d in 1997, oil and gas exports rose, and the industry set new drilling records, says the National Energy Board.

NEB said in its annual report that the industry increased heavy crude and bitumen production last year, but production of light crude declined slightly from 1996 levels. A highlight of 1997 was the start of crude oil production from Hibernia oil field off Newfoundland (OGJ, Nov. 24, 1997, p. 42).

Total crude oil exports in 1997 were 1.19 million b/d, including C5+ and synthetic oil. This is a 28% rise since 1993. Exports consisted of 498,300 b/d of light crude and equivalent and 683,500 b/d of blended heavy crude.

The estimated value of crude oil exports in 1997 was $9.8 billion (Canadian) compared with $10.6 billion in 1996. Export volumes increased, but revenues declined in the latter part of 1997 as oil prices fell.

The U.S. Midwest was the major export market for Canadian crude, followed by Montana and Washington.

Canadian crude oil imports totaled 754,700 b/d in 1997, up 27% since 1993. These imports made up almost 46% of Canadian refinery feedstock. North Sea crude comprised 49% of imports, and OPEC countries supplied 39%.

Oil production, reserves

Production of crude oil and natural gas liquids increased in 1997 over 1996 in all categories except conventional light crude.

Conventional light crude production was 844,200 b/d in 1997, a 7% decline from 882,000 b/d in 1996. Synthetic crude production reached 271,000 b/d in 1997 and C5+ production was 170,000 b/d. Total light crude production in 1997 was 1.285 million b/d.

The board noted production records were set for both bitumen and heavy crude in 1997, with heavy crude output increasing by a substantial 15%, despite pipeline capacity limitations.

Conventional heavy crude production was 548,100 b/d and in situ bitumen production was 239,400 b/d. Total heavy oil production was 787,000 b/d.

NGL production in 1997 was 576,400 b/d.

Remaining conventional crude oil plus crude bitumen reserves at the end of 1996 (the most recent figures) were estimated at 8.2 billion bbl, up 5% from yearend 1995.

A record 17,028 wells were drilled during 1997, a 28% increase over 1996. A total of 8,841 oil wells were completed during 1997, up 33% from 1996.

Reserves additions during 1996 replaced only 69% of Canadian oil production. The board said 80% of wells drilled in 1996 were development wells from established pools and only 20% were exploration wells.

Gas

Natural gas exports to the U.S. increased only 2% in 1997 to 2.91 tcf from 2.85 tcf in 1996. Limitations on pipeline capacity were a major factor, as the load factor on Canadian pipelines was close to 100%.

In 1997, NEB approved 287 MMcfd of additional pipeline capacity.

The Canadian share of the U.S. gas market was 13% of consumption (similar to 1996) and represented 52% of Canadian production. That is up from about 35% 10 years ago.

Export sales were 34% to the Midwest, 27% to California, 22% to the Northeast, 16% to the Pacific Northwest, and 1% to the Rocky Mountain region.

During 1997 the board approved 1.373 tcf of new long-term gas exports for periods of 10-16 years. Decisions on applications for 1.3 tcf were pending.

Gas production in 1997 was similar to 1996 at 5.6 tcf. The major producing provinces were: Alberta 84%, British Columbia 12%, and Sas-katchewan 4%.

The board estimated remaining established reserves of marketable gas at yearend 1996 at 60.8 tcf, excluding volumes from the East Coast offshore and Arctic areas, which are not yet in production. Reserves declined 6% from 1995, partially due to pool revisions. Industry emphasis on heavy oil drilling and development drilling to increase deliverability also contributed to the decline.

The board said that, during 1992-96, cumulative additions to marketable gas reserves replaced 67% of total production.

Natural gas, petroleum, and electricity exports generated gross revenues in 1997 of $24 billion, or $12 billion on a net basis.

NEB activity

NEB said development of a new natural gas basin off the East Coast, a high level of upstream activity, and demand for more pipeline options for oil, gas, and NGL were its major focuses in 1997. It said increasing reliance on market mechanisms and market discipline to determine business decisions are a continuing theme in the evolution of Canada's gas industry.

The board said its most significant single activity in 1997 was public hearings and approval of the Sable gas project of Mobil Oil Canada Properties Ltd., Shell Canada Ltd., and other partners to produce natural gas from fields near Sable Island off Nova Scotia (OGJ, Jan. 19, 1998, p. 26).

The board also approved the Maritimes & Northeast Pipeline and related facilities to move Sable gas to markets in Canada and the U.S. Northeast.

"Approval of the Sable gas projects signals the development of an important new gas supply basin in Canada and the introduction of an important new fuel in the Maritimes," the board said. "Together with the Hibernia oil field, this marks a turning point in Atlantic Canada's net dependence on foreign oil suppliesellipse"

In 1997, the NEB also approved:

A bid by Interprovincial Pipe Line Inc., Calgary, to reverse the flow of its Line 9, originally built in 1976 to carry Western Canada crude from Sarnia, Ont., to Montreal.
Several pipeline projects to move increasing volumes of natural gas liquids from British Columbia to Alberta and to establish main line connections.
An incentive-based negotiated toll settlement between Westcoast Energy Inc., Vancouver, B.C., and its shippers.

The board also followed up on findings of a 1996 stress corrosion cracking inquiry through continued work with the pipeline industry and communities. The inquiry was held after several pipe explosions occurred on the TransCanada PipeLines Ltd. gas pipeline system in Ontario and Manitoba (see related story, this page).

The NEB also began a hearing in late 1997 on the $3.6 billion Alliance project to build a natural gas line from Western Canada to ship 1.3 bcfd of gas to Midwest U.S. markets. That hearing continues.