Oil Sands Production Will Attenuate Impact of Reduced Drilling

April 25, 2015 by

Editor’s Note: While VISAGE rebranded to VERDAZO in April 2016, we haven’t changed the VISAGE name in our previous blog posts. We’re proud of our decade of work as VISAGE and that lives on within these blogs. Enjoy.

The enjoyable part of writing a blog with a discovery analytics tool like VISAGE is that a simple look into an area of interest quickly unravels into a detailed investigation with many unanticipated insights. My plan to review in-situ oil sands production with a couple of charts turned into a comprehensive story told with 7 charts and 1 map. By the end of this blog you will, hopefully, have a new perspective on the oil sands and the positive impact it will have on the near term Canadian oil production decline.

Oil Sands Dominate Oil Production in Canada

In February of 2014 oil sands first dominated all other oil production in the Western Canadian Sedimentary Basin (WCSB). As of February 2015 it now makes up 54% of all WCSB oil production (excluding oil sands mining related production). As the chart below shows, production growth in the oil sands has been at a consistent high since 2010.

Oil-Sands-1

Relative to all the other wells that have ever produced any oil (shown in the map below), the oil sands production comes from a relatively small geographic area.

Map

Over the last decade there has been so much attention on the growth of tight oil production in plays like the Bakken, Cardium and Viking, but the oil sands has dwarfed all tight oil production combined.

Oil-Sands-2

Horizontal Wells and Steep Declines

If we look at the growth in production associated with horizontal wells (excluding oil sands), we can see a dramatic increase in production post 2010 due to fracture stimulated horizontal wells in tight oil plays.

Oil-Sands-4

The dramatic growth in production post 2010 has had an impact of steepening the production declines every year. The chart below shows the production additions each year (excluding oil sands) and how that production declines over time. Notice how much steeper the more recent years are as they become increasingly dominated by horizontal wells.

Oil-Sands-5

Oil Sands Have Lower Decline Rates

The chart below shows oil sands production additions each year and how that production declines over time. Notice how much lower oil sands production declines are relative to non-oil sands production in the previous chart.

Oil-Sands-6

Despite the fact that oil sands annual production additions are less than non-oil-sands, the lower decline rates of previous years collectively support the current oil sands dominant production position. Given that oil sands account for 54% of WCSB oil production, and have shallower declines means that the decrease in drilling that is anticipated for 2015 may not have as dramatic an impact on WCSB oil production rates as our neighbours to the south. There will be an impact … but the oil sands will play a key role in attenuating that impact.

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Production and Play Type data: IHS Information Hub

Analysis, chart and map: VISAGE

Thanks for reading. We welcome your questions and suggestions for future blogs.

Some other blogs you may find of interest:

About VISAGE – visual analytics for the petroleum industry VISAGE analytics software equips operators and analysts in the petroleum industry to make the most valuable and timely decisions possible. VISAGE brings together public and proprietary oil and gas data from multiple sources for easy to use interactive analysis.