Updated August 2017
Production in 2016 decreased by 16 per cent, to 70.1 103 m3/d, as prices continued to fall and the number of wells placed on production was not enough to offset the decline in existing production. The effect of the decline in the number of wells placed on production in 2015 and 2016 was made even more pronounced by the nature of the wells placed on production between 2010 and 2014. The majority of these wells were completed using horizontal multistage fracturing (HMSF) completion technology, which are associated with high initial production and steep decline rates over the first two years of production.
As shown in Figure S4.1 [Tableau] Petroleum Services Association of Canada (PSAC) Areas 2 and 5 remain the most productive, contributing 24 per cent and 22 per cent of total 2016 production, respectively. The Cardium, Mannville, and Devonian Formations, under PSAC Areas 2 and 5, produced over 46 per cent of all Alberta production in 2016. Since 2010, PSAC Areas 2 and 5 have accounted for over 40 per cent of the wells placed on production, which accounts for their overall higher production.
The Mannville Formation continues to have the highest share of total production, at 32 per cent in 2016, followed by the Cardium, at 15 per cent. Production from the Montney Formation, although only 8 per cent of total production, has doubled since 2011. The share of production from the Devonian Formation fell between 2009 and 2013 but has since increased to about 11 per cent of total production in 2016 as producers have begun to use HMSF. Although production from the Woodbend Group, which includes the Duvernay Formation, is relatively small, it has seen a significant year-over-year increase in production since 2012, growing 60 per cent between 2015 and 2016. Overall growth in production, particularly in the abovementioned formations, is strongly linked to the use of HMSF, with production predominantly light and medium density crudes.
PSAC Areas 2 and 5 will continue to have the highest share of wells placed on production over the forecast period. This is because companies are developing the higher value geological targets within these areas. Producers will continue to use HMSF to bring on new production. The Cardium and Mannville Formations are also expected to maintain their significant shares of production as producers continue to target these lower supply cost formations, as reflected in the drilling trends.
Forecast production from wells placed on production on or before 2016 (existing production) and new wells as of 2017 is shown in Figure S4.2 [Tableau]. Production is expected to remain relatively stable over the forecast period, reaching 65.6 103 m3/d in 2026, as the number of new wells placed on production increases and offsets the decline in existing production. However, the number of new wells placed on production does not reach the levels seen between 2010 and 2014.
Since PSAC Areas 2 and 5 are forecast to have the highest share of wells placed on production, the combined share of light and medium density oil production is expected to increase slightly from about 74 per cent in 2017 to 75 per cent by the end of the forecast period, as shown in Figure S4.3 [Tableau].
Details about the methodology used to forecast production can be found in the methodology section.