Volumes —Tables 7 and 8

During 2004, the marketable production of crude oil and equivalent in Canada increased by 3.2%, to 149.4 million cubic metres from 144.8 million cubic metres. The production of non conventional crude oil (synthetic and crude bitumen) continued to increase as it has done for the past several years, supplementing and replacing conventional crude from older fields. Production of crude bitumen rose to 30.9 million cubic metres in 2004, an increase of 23.3% over the 25 million cubic metres produced in 2003. The production of marketable natural gas rose slightly by half a percentage point, to 167.4 billion cubic metres from 166.5 billion cubic metres in 2003.

Exports of Canadian natural gas to the U.S. increased 2.5% to 104 billion cubic metres, after a decline of 5.8% in 2003.

Exports of crude oil and equivalent to the U.S. again increased in 2004, rising by 4.5% to 93.2 million cubic metres from 89.1 million cubic metres in 2003.

Demand by Canadian refineries for domestically produced crude oil and equivalent increased by 5.4% during 2004, to 56.1 million cubic metres from 53.2 million cubic metres in 2003. Crude oil imports increased 3.1% during the year, rising to 54.3 million cubic metres from 52.7 million cubic metres in 2003.

Domestic sales of natural gas (including direct sales) fell by 1.2% in 2004, declining to 72 billion cubic metres from 72.9 billion cubic metres in 2003. Natural gas imports rose 12.2% in 2004, to go from 9.7 billion cubic metres to 10.9 billion cubic metres.

Values — Tables 4  and 5

In 2004, the total value of marketable production of hydrocarbons (including synthetic crude oil, natural gas, natural gas liquids, and elemental sulphur) rose by 11.4% to $85.3 billion from $76.5 billion in 2003. World prices for all crude oil and natural gas commodities were on the upswing during the year.

The value of crude oil and condensate (including pentanes plus) increased by 20.9% to $40.6 billion compared to $33.6 billion in 2003 and natural gas rose to $38.1 billion from $37 billion last year. The value of natural gas processing plant products (propane, butane and ethane) increased by 9.8% to $6.3 billion from $5.7 billion, and elemental sulphur (from natural gas) increased to $207.5 million from last year's level of $152.6 million (an increase of 36%).

The Province of Alberta continued to dominate the overall value of marketable production in 2004, accounting for 74.3%, or $63.4 billion of the total $85.3 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) increased by 20.5% in 2004, to $22.3 billion from $20.5 billion in 2003. This year, royalty payments accounted for 53.1%, field and well operations 37.5%, natural gas processing plants 7.4%, and taxes 2%.

The 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) increased in 2004 to $26.8 billion from $23.8 billion in 2003. Exploration expenditures fell by 1.7% and development spending rose by 18.4%, for an overall increase of 12.5% in capital spending this year compared to 2003.

The above expenditures exclude the non-conventional regions of Alberta and Saskatchewan containing the heavy oils and oilsands. These locations require very high inputs of capital necessary to extract the oil. See Text Table 1  for expenditure details relating to this sector.

Drilling — Table 2

There was an increase in the total number of well completions (oil, gas, dry and others) during 2004, rising by 6.5% to 24,874 wells from 23,363 completions recorded in 2003. Exploratory drilling rose by 8.7% during the year to 5,515 completions from 5,074 wells, and development drilling increased by 7.2% to 16,475 wells from 15,372 completions. During 2004, the number of successful oil wells completed fell to 4,526 wells compared to 4,845 completions last year, and successful gas well completions increased by 16.8% to 15,126 wells compared to 12,951 gas wells completed last year.

Reserves — Table 6  and  2

Remaining established reserves of conventional crude oil and equivalent (excluding oilsands and bitumen) increased slightly by year end 2004 to 762,495,000 cubic metres from 749,911,000 cubic metres in 2003. The reserves replacement, or gross additions, amounted to roughly 114% of the volume of crude and equivalent produced during 2004. At this current rate of production, Canada's reserves of conventional crude oil and equivalent have an estimated economic life (reserves life index) of 8.4 years, up slightly over 2003 due to the current production level.

Synthetic crude oil and developed bitumen reserves are currently estimated to be 1,172,103,000 cubic metres, an increase of 1.8% over 2003. The reserves replacement (gross additions versus production) amounted to 136%, and its reserves life index stands at 20.5 years, down from 2003.

Marketable natural gas established reserves decreased slightly to 1,593 billion cubic metres from 1,594 billion cubic metres in the previous year. The volume of gross additions, by development drilling, replacing the production amounted to 99%. Based upon the amount of remaining established reserves and at the current level of production, the economic life of these reserves remains at 9.1 years, a marginal decrease over 2003. Non-conventional natural gas prospects, such as coal bed methane and tight sands gas, continue to be extensive as field research heightens.