FORT ST. JOHN, B.C. — According to a report released by the National Energy Board last week, the Montney Formation in Northeast B.C. and northwestern Alberta is the only formation in Canada that has seen increased tight oil production since oil prices fell in 2014.
Since mid-2014, Canadian tight oil production decreased from a peak of about 425,000 barrels per day to about 345,000 barrels per day at the end of 2016. The main reductions were seen in the Cardium Formation in Alberta, which fell from 85,000 to 50,000 barrels per day, and the Bakken Formation in Saskatchewan and Manitoba, which decreased from about 60,000 to 40,000 barrels per day.
The Montney Formation was the only formation that had its production grow since 2014, rising by approximately 35,000 barrels per day. This was largely due to increased production of natural gas condensate, which is considered a form of oil. Montney condensate is obtained from tight gas wells, and is in high demand for use as a diluent that allows bitumen to be shipped by pipeline. Consequently, condensate fetches a higher price than crude oil in western Canada.
The overall decline in tight oil production is because of fewer new wells being drilled in response to decreasing prices. The NEB says that tight oil wells typically produce a large amount of oil in their first month, but decline quickly thereafter. That means that new wells must be continually added to maintain production levels. In 2014, the number of producing wells grew by over 3,200 per year. However, by 2016 less than 1,000 new wells were added.
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