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The focus on oil drilling in Western Canada and the United States is expected to help boost oil production in North America over the next five years, growth that is being fuelled by higher oil prices and the development of new technology.

From 2010 to 2016, Western Canadian production is projected to grow by around one million bbls per day, Jay Williams, an energy analyst, Canada, with BENTEK Energy LLC, told an Infocast shale oil summit on Tuesday. Canadian producers are focused on entering known plays with new technology and on oilsands development.

The North American production should grow by about 2.9 million bbls a day by the end of the period.

"There's a lot of growth on the way," he told the conference.

He noted during the presentation that as of Sept. 8 in Western Canada there were 117 bitumen and 295 conventional oil rigs on the land base. Of those, 263 were drilling horizontal holes.

"Gas rigs used to always dominate the land in Western Canada," he pointed out. "[But] oil rigs have really taken off in Western Canada and now they dominate the land."

Companies in Alberta have been applying new technology to legacy plays like the Cardium, breathing new life into traditional oil producing regions that weren't expected to see increased activity.

"The best place to find oil is where you last found it," Williams said. "A lot of these companies are going in using horizontal techonology getting better results [and] being able to get deeper into reservoirs."

Overseas outlets for Canadian oul will be imported, he noted, pointing to Enbridge Inc.'s proposed Northern Gateway pipeline, which would send crude to Asian markets.

"That one has a lot of obstacles still to overcome," he said. "That pipeline

could be a very good escape route for Canadian crude because then they could start pegging themselves to Asian prices for their crude which would help lift their price.

"[But] it's still a ways out."

Meanwhile, producers continue targeting liquids-rich gas due to the gap between prices for these commodities and dry gas. The widening disparity has expanded the value gap to over 20 today from around 11 back in 2008.

"Even with the gas, a lot of companies are transferring over to those liquids-rich areas to help lower their economics and make it economical to drill," Williams noted.

The interest in these targets has lifted Alberta's land sale revenue over the past two years and helped the province to set records. So far this year, land sales have brought in a total of $2.76 billion for 3.25 million hectares at an average of $850.03 per hectare. In the same period last year, the total bonus was $1.71 billion for 2.4 million hectares, which amounted to an average of $713.55.

"Back in 2008, a lot more money was going to [B.C. and Saskatchewan], while in Alberta it was actually coming down," Williams noted. "But recently in the past two years, it has really shot up.

"Companies are buying up these lands to go after the oil, they did it back in 2010 and now they're starting to deploy a lot more rigs to those areas to start drilling," Williams said.

Producers have opened their wallets for land prospective for the Cardium, Alberta Bakken/Exshaw and the Duvernay. At the Sept. 21 land sale, roughly six to seven townships are up for grabs in the Ferrier region, which are situated in the liquids-rich gas window of the Duvernay play.

@ Pipeline News North