The recent downturn in the sales of drilling rights in Alberta, Canada, signals a potential cooling off of the region’s oil boom, reported Bloomberg.
The average price paid for oil sands leases has dropped to C$771/ha, an 18% decrease from the previous year’s average.
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Non-oil sands land prices have seen a 25% decline, reflecting the impact of global trade tensions and oil production dynamics on the sector.
The decline in land prices comes as a stark contrast to the surge in activity following the completion of the Trans Mountain pipeline expansion, which provided producers with nearly 600,000 barrels of new daily shipping capacity.
This capacity boost led to increased output and a rush for new drilling sites, pushing land prices to record highs in 2024.
However, the combined effects of US President Donald Trump’s trade policies and the unexpected OPEC+ production ramp-up have led to a significant drop in oil prices, dampening enthusiasm for new drilling ventures.
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By GlobalData“Canada is not immune to the world’s oil price pains,” commented Enverus Canadian oil and gas research team head Trevor Rix.
The situation in Canada mirrors that of the US, where shale production is showing signs of peaking and drillers are pulling back.
Despite the current challenges, Canadian oil sands producers are expected to continue increasing output.
Notably, the Trans Mountain pipeline is not yet operating at full capacity and there are plans to further expand its throughput.
Similarly, Enbridge is working on increasing the capacity of its Main Line by 150,000 barrels per day.
Also, Synergy Land Services paid C$12,016/ha for land in the Fort Kent field, marking the most expensive oil sands land deal since 2007.
The Elmworth area in the Montney formation has become a hotspot for land sales, fetching an average of C$1,734/ha last year.
