Crown drilling rights auctions reach record low
A key indicator of future oil and gas drilling activity in Alberta has fallen to a record low as pipeline capacity constraints continue to restrain oil patch spending.
According to Canadian Press, this week’s auction of Crown drilling rights — which allow energy exploration on land where mineral rights are held by the province — raised just $3.9 million for the Alberta treasury, bringing the 12-month total to $119 million.
That’s less than the previous low mark of $137 million set in 2016 amid depressed global commodity prices and the lowest since the auction system was adopted in 1977.
The high was in 2011, when a bidding frenzy sparked by the Duvernay oil-bearing formation resulted in $3.5 billion spent on buying rights.
Auctions in British Columbia also posted a record low in 2019, with a total of $14.7 million invested, slightly below the $15.2 million in 2016 that was the previous low. The record high in B.C. was $2.66 billion in 2008.
In Saskatchewan, sales of drilling rights raised about $25 million in 2019, the lowest since 1992. The province’s record year was also 2008, when it raised $1.1 billion.