Oil and Gas Developments in Western Canada in 1986

Abstract

Western Canadian petroleum industry activity slumped in 1986 in response to oil prices that fell to less than half of their 1985 levels. The federal and provincial governments attempted to support the industry with the introduction of new incentive programs and the elimination of the petroleum and gas revenue tax (PGRT). Total number of wells drilled decreased 51% to 5,384 wells. Exploratory drilling fell 41% to 1,955 wells, and development drilling was down 56% to 3,429 wells. Exploratory success rate dropped marginally from 57% to 55% with 634 oil completions and 444 gas completions. Development success rate also dropped (from 89% to 84%) with 2,044 oil completions and 851 gas completions. Exploratory drilling activity fell in every area except the Northwest Territories Arctic region, where it increased slightly. Land sale revenues fell by 67% to $33.8 million (FOOTNOTE 6). Alberta's 25 Crown land sales generated $251 million, Saskatchewan's 4 Crown land sales generated $18 million, British Columbia's 8 Crown land sales generated $28 million, and Manitoba's 2 Crown land sales generated $900,000. Average price per hectare decreased in all provinces. Exploration and development drilling in Alberta continued to dominate western Canada with 78% of the total activity. The premier discovery of the year was made by Shell in the Devonian Swan Hills Formation at Caroline with potentially 56.6 billion m3 of gas in the reservoir. Other Devonian completions were made at Medicine River, Simonette, Kenzie, Gift, Panny-Senex, Hutch, and Shekilie, whereas Cretaceous targets were successfully completed at Enchant, Pageant, and Ferrier. British Columbia activity declined 30% while the average well depth increased by 24%. Active areas included Noel/Kelly, Flathead Valley, and the Halfway trends in the vicinity of Fort St. John. Two interesting dry holes were drilled by BP Canada on Vancouver Island. In Manitoba, no significant discoveries were made. Most of the activity centered around the Waskada, Pierson, and Daly areas. In the Northwest Territories-Arctic region, total drilling activity decreased almost 20%. Exploration drilling increased, however, by 15%, with all of that increase coming from onshore activity. The most significant discovery was the Gulf et al Amauligak I-65A well, which has proven additional reserves on the Amauligak structure. This structure, with its estimated 110-125 million m3 of recoverable oil, could well qualify as the lead project for the development of the Beaufort Sea. The most significant gas discovery of 1986 was made by Esso at the Hansen G-07 well, which tested gas and condensate from the Tertiary Kugmallit Formation. Saskatchewan activity plummeted to 27% of its record high 1985 levels. A rebirth of hope for prospects of deep Saskatchewan oil was caused by the Home et al Tableland discovery in the Devonian Winnipegosis of southeastern Saskatchewan. Exploration activity was concentrated in areas of lighter crude oil and gas potential such as the Dodsland, Plato, and Hatton areas. At year end, it was still uncertain if the Husky Oil heavy oil upgrader at Lloydminster would proceed.