Volumes – Tables 7 and 8

During 2002, the marketable production of crude oil and equivalent increased by 6.2 % to 137.0 million cubic metres, from 129.0 million cubic metres in 2001. The higher volumes were necessitated by the slight increase to domestic refineries, and the marked increase required by the export market in the United States. Synthetic crude oil production (including crude bitumen) continued to increase as it has done for the past ten years, replacing depleting crude production from older conventional fields. Marketable natural gas production increased marginally by 0.5% to 172.2 billion cubic metres, from 171.4 billion cubic metres recorded in 2001. Although export volumes to the United States dipped slightly, the domestic demand for gas increased.

Exports for Canadian natural gas to the U.S. in 2002 declined by about 0.5%, from a volume of 108.2 billion cubic metres in the previous year to 107.7 billion cubic metres.

Exports of crude oil and equivalents to the U.S. increased by 6.9% whereas volumes shipped to other countries dropped substantially by 42.3%. Shipments to the U.S. increased to 84.8 million cubic metres from last year’s volume of 79.3 million cubic metres. During 2002, volumes exported to other countries fell to 155 thousand cubic metres from 270 thousand cubic metres in 2001.

Demand by Canadian refineries for domestically produced crude oil and equivalent increased by 7.1% to 53.1 million cubic metres during 2002. Imports of crude oil and equivalent dropped to 51.1 million cubic metres during this period, from 53.5 million cubic metres in 2001, for a decrease of 4.5%.

Domestic sales of natural gas (including direct sales) increased by 5.1% in 2002, to 70.3 billion cubic metres from 66.9 billion cubic metres in 2001. The increase in sales was attributable to the higher demand required by the residential, commercial and industrial sectors.

Values – Tables 4 and 5-1

In 2002, the value of marketable production (including synthetic crude oil, natural gas and natural gas liquids) amounted to $57.7 billion. This was a decrease of 8.6% from the $63.2 billion recorded in 2001. World crude oil prices continued to be strong, however there was a decline in natural gas prices during the year.

The value of crude oil and equivalent (including field condensate and pentanes plus) increased by 20.2% to $30.0 billion due to the increase in production volume. The value of natural gas, however, fell markedly by 29.6% to $23.7 billion, although production increased slightly, reflecting a sharp reduction in natural gas prices. The value of natural gas processing plant products (which are propane, butane, ethane, and sulphur) amounted to some $4.1 billion, down by 8.9% over the 2001 level. The province of Alberta continued to maintain its dominance during 2002 in the value of marketable production, accounting for 72.5% or $41.8 billion of the $57.7 billion.

Expenditures – Conventional sector (Table 3 )

Operating expenditures (classified here as expenditures relating to field and well operations, natural gas processing and re-processing plant operations, taxes (excluding income taxes), other operating expenditures and royalties) decreased to $17.4 billion in 2002 from $20.8 billion recorded in 2001, for a decline of 16.4%. During this year, royalty payments accounted for 45.8%, field and well operations 44.0%, natural gas processing plants almost 8.0%, and taxes 2.2%.

Capital expenditures (classified as expenditures relating to geological and geophysical operations, exploration drilling, land acquisition and rentals, development drilling, production facilities, enhanced recovery and pressure maintenance, natural gas plants and other) decreased to $18.0 billion in 2002 from $21.8 billion in 2001. During the current year, geological and geophysical spending accounted for 6.4%, exploratory and development drilling 54.6%, production facilities 25.4%, and natural gas processing plants 4.5%. Land acquisition and rentals (which includes permit fees, bonuses, legal and filing fees) accounted for 9.1% of the total capital expenditures.

The above expenditures exclude the non-conventional regions, which are the geographic areas of Cold Lake, Lloydminster, Peace River, Athabasca, Wabasca, Lindbergh, Wolf Lake, Frog Lake and Britnell. See text table 1 for expenditure details relating to this sector. In these regions, the capital expenditures rose by 14.3% during the year to $6.8 billion from $5.9 billion in 2001.

Drilling – Table 2

Total well drilling completions decreased during 2002 by 13% to 17,182 from 19,752 in 2001. The number of exploratory well completions is a leading indicator of future field development used to determine reserves additions and production. During the year, the number of exploration wells completed fell by almost 20%, to 4,044 from 5,017 wells completed in the previous year, while only 10,694 development wells were completed, down 15.0% from 2001. This year, overall successful oil well completions amounted to 4,319 compared to 4,732 oil wells in 2001 while the number of gas wells fell to 9,061 compared to 10,757 gas wells completed in 2001. 

Reserves – Table 6 and text table 2

Remaining established reserves of conventional crude oil and equivalent (excluding oilsands and crude bitumen) again decreased by year-end 2002 to 796 324 thousand cubic metres from 829 697 thousand cubic metres in 2001. Reflective of the search by industry for new supplies of conventional crude oil, reserves replacement amounted to 65% of produced oil and equivalent during 2002. At current rates of extraction, Canadian reserves of conventional crude oil and equivalent have an estimated economic life of approximately 8.4 years, down marginally from 2001.

Synthetic crude oil and developed bitumen reserves are estimated to be 1 097 381 thousand cubic metres, an increase of 2.5% over 2001. At current rates of production, these reserves have an economic life of 26 years. It should be noted that Canada’s non-conventional oilsands deposits located in Northern Alberta are among the largest in the world. This resource base is estimated to contain some 397 billion cubic metres, of which 48 billion cubic metres are recoverable using current technology. However, oilsands projects to extract this resource require large amounts of capital.

Marketable natural gas reserves decreased by 1.7% in 2002, to 1 664 billion cubic metres from 1 694 billion cubic metres in 2001. Almost 84% of natural gas production was replaced through development drilling. Natural gas reserves have continued to decline over the past several years, and based on current production rates, gas reserves have an economic life of about 9 years. Non-conventional natural gas prospects, such as coal bed methane and tight sands gas, are extensive and only recently are intensive studies being performed in these areas.