capp.ca
CAPP Releases 1999 Petroleum Reserves Report
November 24, 2000
For Immediate Release
Calgary, Alberta - The Canadian Association of Petroleum
Producers (CAPP) today released its annual estimates of Canada’s
crude oil and natural gas reserves for year-end 1999. This report
provides an accurate national reserve picture that underpins
investment and public policy decisions for the oil and gas industry.
According to John Dielwart, chair of CAPP’s Fiscal Executive
Policy Group, "Canada’s remaining reserves of crude oil and
equivalent increased by 2.1 billion barrels in 1999. This was
primarily due to reserve additions from oil sands areas. In addition,
industry added an estimated 5 trillion cubic feet of natural gas in
1999."
Reserves by Commodity
Conventional oil
Conventional oil reserves in Western Canada declined by 3.7% in
1999 to 3.5 billion barrels. Industry replaced 70% of 1999
production of 441 million barrels. This occurred despite low
activity levels resulting from soft oil prices during 1999, particularly
in the first six months when the benchmark West Texas
Intermediate averaged $15.36 U.S.
Oil from oil sands mining projects
The addition of reserves from booking the Shell Albian Project,
north of Fort McMurray, and revisions to last year’s estimates for
Suncor and Syncrude projects, resulted in gross additions of 2.3
billion barrels of oil reserves. (It is important to recognize that,
although considered to be proved, approximately 60 per cent of
Canada’s 5 billion barrels of synthetic oil reserves will require
billions of dollars of investment before production starts.)
Natural gas
Natural gas reserves in the Western Canada Sedimentary Basin
decreased 1.7% from year-end 1998 to 58.1 trillion cubic feet.
The industry replaced 83% of its 1999 production versus 76% in
1998. Regional drilling followed the trend in 1999 - close to 60 per
cent of all gas wells drilled in Alberta were in the shallow gas areas
where reserves are well defined and already booked.
Mr. Dielwart added, "By its nature, our industry is highly
capital-intensive. The natural decline rates of production from
individual wells require that we invest large sums of money just to
maintain current production levels. As a result, our industry is the
single largest private-sector investor in Canada at approximately
$21 billion this year."
It is important to recognize that the industry has seen record natural
gas drilling activity in 2000, a direct result of the growing demand
for natural gas in North America.
1999 Reserves in a Broader Context
This report reflects the lower activity levels of 1999, not the higher
levels seen so far in 2000. The petroleum industry has replaced
close to 95 per cent of natural gas production and 90 per cent of
crude oil production for the 1993-1998 period in the Western
Canada Sedimentary Basin.
Canada is the 13th largest petroleum producer and third largest
natural gas producer in the world. CAPP acknowledges the
Alberta Energy and Utilities Board, the British Columbia and
Saskatchewan Ministries of Energy and Mines and Manitoba
Conservation for their contribution to the review process.
1999 CAPP Reserves Report - Background and Additional
Information
CAPP has compiled Canadian oil reserves since 1951 and natural
gas reserves since 1955. Estimates are based on a survey of
operators of major pools combined with provincial government and
regulatory agency estimates for small pools.
Established reserves are a portion of the ultimate potential
production from a sedimentary basin. Reserves do not
include resources estimated to exist but yet to be
discovered. As well, they do not include all frontier areas
known to exist but not developed. Total resource estimates
are available in the National Energy Board’s
Supply/Demand Study.
Oil sands reserves estimated in the CAPP report include
only developed, currently producing projects or projects on
which a significant amount of money is being spent. There
are estimated to be 300 billion barrels of bitumen ultimately
recoverable in the Alberta oil sands.
Reserves-to-production ratio is an estimate of working
inventory at a point in time calculated by dividing reserves at
year-end by annual production. It should not be considered
the number of producing years left in a basin.
Crude oil and equivalent includes conventional oil, synthetic,
bitumen and pentanes plus.
A summary of significant reserves changes for year-end 1999
follows:
Conventional Crude Oil
Canada
Gross additions, such as new discoveries, development
drilling and re-assessments of producing pools were 308
million barrels versus production of 481 million barrels.
Reserves inventory at year-end 1999 is estimated at 4,706
million barrels.
Western Canada
Reserves at year-end 1999 were estimated at 3,486 million
barrels, down from 3,619 million barrels at year-end 1998.
The lower than normal reserves replacement rate was a
carry-over from the low activity levels in 1998 and 1999.
Alberta replaced 76 per cent of its 1999 production;
remaining reserves at year-end are estimated at 2,148
million barrels.
Saskatchewan replaced 45 per cent of its production.
Reserves fell from 1,139 million barrels in 1998 to 1,064
million barrels in 1999. Saskatchewan was particularly
hard-hit by lower oil prices.
East Coast Offshore
Other than production, changes made to the East Coast
reflect adjustments to reserves for the Cohasset/Panuke
project that was shut-in in December last year. CAPP
currently books oil reserves for Hibernia and Terra Nova at
868 million barrels.
Natural Gas
Canada
Reserves at year-end decreased by 1.6% from 62 to 61
trillion cubic feet in 1999. Industry replaced 83 per cent of
the 1999 production of 6 trillion cubic feet.
Western Canada
Natural gas reserves in the Western Canada Sedimentary
Basin decreased 1.7% from year-end 1998 to 58.1 trillion
cubic feet.
In Alberta, industry replaced 76 per cent of production, up
from 66 per cent in 1998. Remaining reserves at year-end
1999 are estimated at 46.6 trillion cubic feet. In 1999,
shallow gas drilling accounted for 60% of all gas wells in the
province. Reserves for these wells are usually booked in the
year in which the pool was discovered.
Industry replaced just over 100 per cent of production in
British Columbia. Reserves remain flat at 8.5 trillion cubic
feet.
East Coast Offshore
No changes to reserves. Currently, CAPP only reports
natural gas reserves for the Sable Offshore Energy Project.
Outlook for natural gas drilling
Industry forecasts indicate that natural gas drilling in western
Canada will reach record levels this year, surpassing the previous
record year 1999 by more than 2,100 wells.
Increased activity in the deeper regions of Alberta and British
Columbia are a result of the Alliance Pipeline system coming
on-stream in late November 2000, as well as strong demand for
natural gas in North America.
The additional drilling will result in spin-off benefits to the regions in
the form of increased employment and payments to municipalities,
as well as payments to the crown in the form of royalties and land
access payments.
Oil Sands (All located in northern Alberta)
Mining-integrated synthetic crude oil projects
The first-ever reserves booking for the Albian project, combined
with adjustments to last year’s estimates for the Suncor and
Syncrude projects, resulted in the gross addition of 2.3 billion
barrels. Last year, approximately $2 billion was spent at these
mining projects. Reserves for the mining projects are 5 billion
barrels.
In-situ bitumen
Depressed oil prices in 1998 and 1999 continued to have a direct
impact on the development of in-situ oil sands as some producers
temporarily scaled back activity with low prices. Just over $250
million was spent in 1999 versus $1 billion in 1997. Reserves for
developed in-situ projects are estimated at 1,560 million barrels.
More complete information on reserves, spending, production and
other key statistics is available in the CAPP Statistical Handbook,
available through CAPP Publications at (403) 267-1109.
Crude Oil table
Natural Gas Table
CAPP is the voice of Canada’s upstream petroleum industry.
CAPP’s 160 member companies produce 95 per cent of
Canada’s oil and natural gas, inject over $30 billion into the
Canadian economy and generate a trade surplus in excess of $14
billion. The upstream petroleum industry directly and indirectly
employs over 240,000 Canadians. CAPP’s mission is to enhance
the economic well-being and sustainability of the Canadian
upstream petroleum industry in a socially, environmentally,
technically responsible and safe manner. |
