Making the Most Out of a Challenging Year

The AER says fewer wells were drilled last year

Alberta’s oil and gas producers found themselves navigating through some turbulence in 2016 with the continued trend of low global crude oil prices and weak natural gas prices.

But even when turbulence disrupts a smooth course, there’s nothing to do but keep moving forward.

Producers showed signs of caution as they faced another challenging year. A recent forecast report released by the Alberta Energy Regulator (AER) suggests that most took action by cutting back on spending and production.

“Due to the low price environment, producers deferred spending,” explains Glen Tsui, an AER economist. “Where they did spend, the focus was on making their existing operations more efficient.”

Wells Down

The AER reports that the total number of wells drilled in 2016 fell from 2015, a trend that has been ongoing in recent years.

Companies are drilling fewer wells because of low oil and gas prices, but also because they can squeeze more production efficiency from horizontal wells due to their longer well lengths and additional fracturing stages. These horizontal wells have become the majority in Alberta.

“Horizontal wells produce at higher rates than typical vertical wells,” says Tsui. “This means that fewer wells need to be drilled to get more production.”

Here’s how wells drilled stacked up last year, broken down by well type:

Natural gas

Crude Oil

  • Down by 9 per cent to 827 from 912.
  • 72 per cent were horizontal wells that used multistage fracturing.


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