Canada has 15 years of profitable supplies of oil and gas even at depressed energy prices, nearly triple the amount of the United States, according to a new analysis of the remaining drilling inventory in North America by energy researcher Enverus.

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The oilsands and Western Canada‘s gas-rich Montney Formation are home to around 15 years of production that can turn a profit for companies even if energy prices fall below US$60 for benchmark West Texas Intermediate (WTI), presuming current activity levels, the report said.

Oil inventories in the U.S. capable of generating adequate returns at depressed prices are limited to about five years.

“(The Montney and the oilsands) have the inventory length that really leads the pack; everything else is not even comparable,” Alex Ljubojevic, Enverus intelligence research director, said.

The average breakeven price for oilsands steam-assisted gravity drainage (SAGD) projects was around US$45 per barrel of WTI in 2023-2024, Enverus said. The only lower-cost supply in North America can be found in the Texas Permian Basin.

The breakeven price for Montney producers was US$50 per barrel of WTI. Production rich in condensates is also driving the profitability of gas wells for operators in the vast Montney region.

“Gas prices are, in a lot of cases, not really the contributing factor to drill or not drill a well,” Ljubojevic said. “It’s the condensate that’s coming off the wells that really drives the economics. (Gas prices at the AECO hub in Alberta) can be 50 cents, 60 cents (per gigajoule). Canadian operators are still drilling.”

Notably, some Canadian producers sold condensate at prices above US$70 per barrel in the last quarter.

But boasting years of low-cost inventory won’t help the Canadian sector grow if it can’t get more barrels to market.

Canadian producers welcomed the startup of the Trans Mountain (TMX) pipeline expansion last spring as it tripled the existing pipeline’s capacity to 890,000 barrels per day and helped shrink the discounts on heavy Canadian crude.

The TMX expansion is a rare success in the industry given Canada’s history of abandoned pipeline projects in recent decades, including Keystone XL, TC Energy Corp.‘s Energy East and Enbridge Inc.‘s Northern Gateway pipelines.

“I am all but certain that Canadian egress will fall short of requirement before the end of 2030, possibly as soon as the end of 2026,” said Rory Johnston, founder of Commodity Context.

He said current pipeline space is sufficient, but constraints on shipping will be one of the biggest impediments to future growth in Canada.

“We’re growing really, really fast and we’re going to eat through that very quickly and we have nothing to catch us on the other end,” Johnston said.

As a result, while Enverus lauds the potential of Canada’s oil and gas reserves, the firm’s forecasted growth for the Canadian sector is modest for the remainder of the decade.

It expects Canada will add around 200,000 to 300,000 barrels per day to its production by 2030. The U.S., by contrast, could grow by roughly one million barrels per day during that same period.

“We still anticipate capital to be allocated to those lower-cost regions, specifically the Montney and the oilsands, going forward,” Ljubojevic said. “They’re gonna be an important contribution to the overall supply growth we have in North America.”

• Email: mpotkins@postmedia.com

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