When $1.3-billion isn't that much
Dave Ebner, Globe and Mail
December 12, 2007 at 6:39 PM EST
The last sale of new oil and natural gas exploration rights in Alberta for the year was announced late Wednesday, with $68-million coming into the provincial treasury, boosting the total for the year to $1.29-billion.
That’s the third-highest annual haul in the province’s history — but it’s down more than 60 per cent from the record of $3.43-billion hit last year, and also lower than the $2.26-billion in 2005.
The high before 2005 was reached in 1997, with $1.15-billion rolling in, as companies chased conventional plays as well as the oil sands.
This year’s take was split between conventional properties and the oil sands.
Right now in Alberta, spending on new exploration rights is down for a variety of reasons. The first is the low price of natural gas. Another big factor is the decision to raise royalties on oil and gas starting in 2009. In the oil sands, one issue is that most of the prospective land is already taken.
In past years, such as the early 1980s or the late 1990s, declines in spending on new exploration rights have occurred alongside general industry malaise or big busts.
(In Alberta, new exploration rights are sold twice a month, generally. Companies ask the government to post certain blocks of land for bidding. Bids are made blind and the highest bidder wins.)
While Alberta is “slumping,” its neighbours are enjoying record years, though still not nearly as big as the country’s energy capital.
In British Columbia, where natural gas exploration is active in the province’s northeast, the results of the final sale are expected Thursday. Right now, the total for 2007 stands at $646-million, just shy of 2003’s record of $646.7-million.
On a per-hectare basis, rates in B.C. this year are up about 50 per cent from the past two years.
Saskatchewan is enjoying a surge of interest in oil production, particularly in the emerging Bakken oil field in the southern part of the province. Saskatchewan’s total exploration sales take this year hit $250-million, surpassing the long-standing record of $200-million reached in 1994.
Both Saskatchewan and B.C. are selling themselves to companies as places where royalties on oil and gas production are more competitive compared with Alberta.
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