A boom in sales of drilling rights in Alberta is fading as U.S. President Donald Trump’s trade war and OPEC+ production increases hammer crude prices. Read More
The slumping land prices are an early sign the Canadian drilling boom spurred by last year’s completion of the Trans Mountain pipeline expansion may be coming to an end.
The slumping land prices are an early sign the Canadian drilling boom spurred by last year’s completion of the Trans Mountain pipeline expansion may be coming to an end.
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A boom in sales of drilling rights in Alberta is fading as U.S. President Donald Trump’s trade war and OPEC+ production increases hammer crude prices.
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The average price paid to lease oilsands lands for development tumbled to C$771 per hectare this year, according to provincial data. That’s down 18 per cent from last year’s average, which was the highest since 2007. For lands outside of the oilsands, the price has fallen 25 per cent.
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The slumping land prices are an early sign the Canadian drilling boom spurred by last year’s completion of the Trans Mountain pipeline expansion may be coming to an end. With the Trans Mountain project giving producers almost 600,000 barrels of new daily shipping capacity, drillers increased output and snapped up new drilling sites, sending land prices to multidecade highs in 2024.
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But the twin shocks of Trump’s global tariffs and OPEC+’s faster-than-expected production increases have sent oil prices tumbling to four-year lows in recent weeks, sapping drillers’ appetite for new production sites.
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“Canada is not immune to the world’s oil price pains,” said Trevor Rix, head of the Canadian oil and gas research team at Enverus.
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The softening in Canada’s oilpatch mirrors the situation in the U.S., where drillers are retrenching and some executives are saying shale production has likely peaked.
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But Canada’s producers are expected to keep ramping up output in the years ahead. For oilsands producers, lower oil prices can be countered by increased volumes, and a new liquefied natural gas plant in British Columbia will encourage drilling in oil-rich areas of western Canada, Kevin Birn, chief analyst for Canadian oil markets for S&P Global.
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Not only is Trans Mountain not fully filled, the company is already looking to expand capacity on its system. Enbridge Inc. is also working to add 150,000 barrels of daily capacity on its Main Line in the coming years.
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Oilsands output will grow by about 500,000 barrels a day to 3.8 million barrels a day by 2030, according to S&P Global Commodity Insights. Much of the new oil is likely to flow through Trans Mountain to the Pacific Rim, and it may be matched by growing volumes of natural gas as Canada’s first major LNG terminal is slated to start later this year.