By Canadian Press

OIL AND GAS INDUSTRY

Crown drilling rights sales down in three Western-most Canadian provinces

Nov 25, 2019 | 5:04 PM

CALGARY – A key indicator of future oil and gas drilling activity in Western Canada is sliding lower as the industry deals with a lack of pipeline capacity, oil production curtailments and difficulty accessing capital markets.

Sales of Crown drilling rights — necessary for energy exploration on land where mineral rights are held by the province — have plunged in B-C, Alberta and Saskatchewan this year.

Richard Masson, an executive fellow with the School of Public Policy at the University of Calgary, says the trend indicates a lack of enthusiasm to grow production in the oilpatch mainly due to insufficient pipeline space.

In Alberta, auctions are on track for a record low in 2019 with just $100-million raised and two sales left to go.

The province looks likely to finish lower than the $137-million it received in 2016, its lowest year on record.

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In British Columbia, auctions have delivered $64-million so far this year, down from $173-million last year and well short of the record in 2008 record of $2.66 billion.

In Saskatchewan, sales of drilling rights have raised about $22-million, down from $51-million in six auctions last year and far back of the $1.1 billion raised in 2008.