Market Snapshot: Saskatchewan to Supply nearly Half of Western Canadian Conventional, Tight and Shale Oil by 2017, as Overall Western Canadian Deliverability Falls

Release date: 2015-10-29

The NEB issued its inaugural Short-term Western Canadian Conventional, Tight, and Shale Oil Deliverability Energy Briefing Note, with three projections of western Canadian oil deliverabilityFootnote 1 to the end of 2017. These projections do not include oil sands bitumen, synthetic crude oil, or oil production from other regions of Canada.

Saskatchewan is projected to supply nearly half of Canadian conventional, tight, and shale oilFootnote 2 deliverability by 2017, increasing its share of oil deliverability from 44 per cent in 2014 to 46 per cent in 2017 in the Mid-Range Price Case. Growth in Saskatchewan’s production can be attributed to the continued production and expansion of enhanced oil recovery projects. These developments have long production lifespans and low ongoing operating capital costs, which make them economic in a lower oil price environment.

Figure Source and Description

Source: National Energy Board

Description: The above chart depicts the historical and Mid-Range Price Case projection of western Canadian conventional, tight, and shale oil deliverability to the end of 2017. Western Canadian conventional, tight, and shale oil deliverability declines over the projection, and in the Mid-Range Price Case it falls from 1.17 MMbbl/d in 2014 to 1.03 MMbbl/d by 2017. In 2017, Saskatchewan’s conventional crude deliverability is 478 MMbbl/d, while Alberta’s is 498 MMbbl/d.

The decline in oil prices since mid-2014 has reduced revenues and constrained the cash flows of western Canadian producers. In the Mid-Range Price Case, the average West Texas Intermediate (WTI) price falls from US$95/bbl in 2014 to US$50/bbl in 2015, and then increases to US$68/bbl in 2017. Tight budgets and decreased capital expenditures are expected to result in significantly less oil drilling. Thus, western Canadian oil deliverability is projected to decline over the period, from 186 10³m³/d (1.17 million bbl/d) in 2014 to 164 10³m³/d (1.03 million bbl/d) in 2017. Despite the decline in overall deliverability, the focus on drilling the most economic prospects in western Canada is expected to improve well performance and thus increase overall deliverability on a per-well basis.

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