NEB: Majors continue to dominate crude production in western Canada

Major producers’ share of operated crude production in western Canada increased to 69% in 2014 from 61% in 2008, according to the National Energy Board (OGJ Online, Oct. 9, 2015). During the same period, shares held by all other producer categories shrank, including intermediates, juniors, emerging juniors, and marginal producers, NEB said.

NEB said bitumen represented two thirds of all crude oil production in western Canada in 2014, compared with just more than half of production in 2008. “As a result, these projects tend to be operated by major producers, as they are able to attract investment capital and possess stable cash flows to support developing projects before they begin generating revenue,” NEB said.

Intermediates are also capable of developing the oil sands, but their projects have been built at smaller scales and have not resulted in an increase in intermediates’ share of oil production. “This is in contrast to the natural gas market, in which large midsize companies have gained significant share of total tight gas production in western Canada.”

The overall number of oil producers in western Canada fell 33% to 615 in 2014 from 919 in 2008, NEB said.

“Many marginal and emerging junior producers struggle to attract the investment capital required for modern oil development—such as oil sands or tight oil projects—and some have exited the western Canadian market,” NEB added. “As these producers leave, their assets are purchased by larger producers, specifically juniors and intermediates that can revitalize conventional production through water floods or tight oil development.”