Oil and gas production in the Battle River region has been declining over the last five years, with gas production declining by 24.1% between 2004 and 2009, and oil production by 28.3%. Gas production declined by 15.9% between 2008 and 2009, and oil production by 7.7%.
Battle River’s share of overall Alberta gas production was 3.0% in 2009. Average annual gas prices dropped by 53.3% in 2009 to $3.65 per gigajoule. So far in 2010, gas prices have averaged $3.73, a slight increase from 2009, and low by historical standards.
The Battle River region is the second largest conventional oil producing region in Alberta and the fifth largest overall oil producer (combining conventional and oil-sands). The region’s share of Alberta’s conventional oil production was 14.7% in 2009, but its share of total crude oil output was only 3.5%. Oil prices dropped by 38.0% to US$61.80 per barrel in 2009. However, so far in 2010 oil prices have averaged $78.08, an increase of 26.3%.
Over the last five years, the number of spudded wells1 in the region has dropped 84.3%. Between 2008 and 2009, the spud count dropped by 65.3% to 231 wells, accounting for 3.2% of the Alberta total. Part of the decline can be attributed to a weak global economy and soft energy prices. However, in the first 10 months of 2010, the number of wells drilled in Alberta rose 44% from the same period of 2009, largely because of a more than doubling in the number of conventional oil wells. The Petroleum Services Association of Canada is forecasting an increase of 5% in 2011 over 2010 for Alberta drilling. These drilling estimates and forecasts should provide some optimism for oil producers in Battle River.
The region’s total gas potential represents 5.2% of Alberta’s overall reserves, and oil potential is 10.4% of Alberta’s conventional reserves.
1 A spud is the very beginning of a drilling operation for a well.
Date Updated: Wed, 13 Jun 2012 12:42:59