Production of conventional oil on the rise

After more than a decade of decline, conventional crude oil production is making a comeback thanks to the application of new technology.

Horizontal drilling and multistage hydraulic fracturing is now used to reinvigorate mature basins in Western Canada where tight oil is found. By applying hydraulic fracturing techniques, the industry expects to double or even triple the percentage of the resource that can be recovered from these reservoirs. Tight oil is conventional oil contained in rocks with low permeability, such as shale. Typically, this oil will not flow without advanced drilling and completion processes.

In 2012, conventional crude oil production levels in Canada reached 1.2 million barrels per day, a level not seen since 2004. Growth is expected to continue and is forecast to reach 1.4 million barrels per day by 2015 and hold at that level through to 2030. Light tight oil is expected to account for the majority of this growth.

Most conventional oil production in Western Canada comes from Alberta and Saskatchewan.

Data from the Alberta Energy Regulator (formerly the Energy Resources Conservation Board) shows that of the more than 3,000 new oil wells in production in 2012, 77% were horizontal wells, including those using multistage hydraulic fracturing techniques. This is more than double the number that were put in production in 2010, the first year in which horizontal drilling really took off in the province. Alberta is a leader in tight oil drilling activity due to the potential of its Cardium and Viking plays.

The extensive Bakken play, which spans North Dakota and Montana in the United States, and parts of Saskatchewan and Manitoba, is a significant source of production. CAPP began surveying Saskatchewan oil producers in 2012. Another survey was undertaken in early 2013 for an update on drilling plans. Data indicates that drilling and production from horizontal wells in Saskatchewan will continue to grow year over year throughout the next two decades.

While accounting for just 7% of light conventional production from Western Canada, Manitoba has more than tripled production since 2004.