Canada Enjoys Short Boost in Production Prosperity in the North American Oil Patch Series: POINTS OF THE COMPASS. Part 22 of a Series. Third of Three Articles Appearing Today
Fred Langan,, The Christian Science Monitor
THE spike in world oil prices prior to the Persian Gulf war has encouraged Canadian oil and gas producers to start drilling again.
"Capital spending by oil and gas companies is increasing in response to higher commodity prices and new export market opportunities for natural gas," reports Peters & Co. of Calgary, Alberta, in a research report on the Canadian oil industry. The firm reports that oil drilling in 1990 was half what it was in 1988 and at a low for the last five years. The reason: low oil prices and too much natural gas.
"The Persian Gulf crisis has given the exploration companies a significant boost to their cash flows. It has also improved the economics for oil-related investment," states the report.
Here are some immediate spending plans:
- Nova Corporation, TransCanada PipeLines Limited, and Westcoast Energy Inc. are spending more than US$1.72 billion on pipelines and plants in 1991.
- The Hibernia drilling program off Newfoundland - the only significant oil project outside of western Canada - starts this year. Developing offshore wells in the oil-rich waters off Newfoundland will eventually cost US$4.3 billion and will be heavily subsidized by the federal government.
- Shell Canada will spend US$774 million developing the Caroline oil and gas field in Alberta.
"It's going to be busy. Alberta's economy is booming as a result," says Hans Maciej, vice president of the Canadian Petroleum Association in Calgary. "We see conventional exploration increasing by 12 to 15 percent, and overall spending rises by 30 percent when you add the mega-projects."
The interest in conventional drilling for oil and gas is not confined to Alberta, Canada's leading producer. Peters & Co. reports increased interest in land sales in British Columbia's oil and gas regions. But although Canada's oil exploration business may be making a comeback, the long-term outlook for oil and gas production appears gloomy. Figures released by the National Energy Board in Ottawa show falling reserves. …