Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials HomeOil & GasNewsCanada unleashes wave of oil drilling permits in next big playClearwater production rose from 30,000 barrels a day in 2017 to 230,000 barrels a day last yearAuthor of the article:Last updated 1 hour ago You can save this article by registering for free here. Or sign-in if you have an account.Once minnows, Clearwater drillers Spur Petroleum Ltd. and Tamarack have risen into the ranks of the top 10 oil producers in Alberta, rivalling some oilsands companies. Photo by Artur Widak/NurPhoto via Getty ImagesAs oil prices surged this spring, Alberta producers didn’t look to Canada’s long-cycle oilsands. Instead, they rushed to drill the Clearwater formation, a low-cost conventional oil play that lets producers bring on new supply far more quickly.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorAlberta issued 1,764 drilling licenses between the start of the year and June 12, the most for a similar period since 2014, provincial data show. Nearly one in five permits targeted the Clearwater formation, the highest share on record.For decades, Canada’s oil industry has been defined by the oilsands, where multi-billion-dollar projects can take years to build. Clearwater is changing that equation. As the Iran war exposed the vulnerability of global oil supplies, the formation gave Alberta producers the opportunity to respond to higher prices with new production in months, rather than years.Breaking business news, incisive views, must-reads and market signals. Weekdays by 9 a.m.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Posthaste will soon be in your inbox.We encountered an issue signing you up. Please try again“It doesn’t take a whole bunch of capital to get started, and therefore it’s quite cost efficient,” said Brian Schmidt, chief executive of Tamarack Valley Energy Ltd., one of the two largest Clearwater producers. “It’s phenomenal. There’s no conventional play that compares.”The Clearwater yields dense, high-sulfur crude oil similar to that found in Canada’s oilsands. But unlike the oilsands, the crude can be extracted at a lower cost using conventional multilateral drilling techniques, without the need for pumping steam into the ground. That’s what enables production to be brought on more quickly.The formation has attracted some major producers including Canadian Natural Resources Ltd., Canada’s biggest oil company. But the Clearwater has mostly been the playground of smaller firms.Once minnows, Clearwater drillers Spur Petroleum Ltd. and Tamarack have risen into the ranks of the top 10 oil producers in Alberta, rivalling some oilsands companies.Tamarack has received 89 drilling licenses this year, up by 37 from the same period last year, the biggest increase of any company in the province, Alberta Energy Regulator data show. Wells targeting the Clearwater accounted for 80 of those licenses, second only in volume to privately-held Spur Petroleum.The company sold its position in the Charlie Lake region for $804 million in May to focus entirely on the Clearwater. Schmidt, the chief executive, said by phone that Tamarack has made “modest” increases in its capital budget to between $430 million and $450 million. He emphasized that the advent in recent years of multilateral, horizontal drilling has made the Clearwater viable. Tamarack and others have been injecting water into the reservoir to push out more oil.Headwater Exploration Inc., another major Clearwater producer, increased its capital budget to $250 million from $185 after raising the company’s forecast oil price by more than US$15 to YS$78.85 a barrel amid the Iran war. Production will grow by 10 per cent this year, versus eight per cent in earlier forecasts. Most of the growth is coming from investing in equipment to inject water into the reservoir, which roughly doubles the amount of oil that can be recovered at less than double the cost per well, Jeff Magee, the company’s vice president of engineering, said by phone.Spur Petroleum didn’t respond to a request for comment.Located in the boreal forests of north central Alberta, the Clearwater emerged from obscurity in 2017 following a series of high-priced land sales in the Marten Hills and Nipisi region, north of the provincial capital of Edmonton. Production from the formation has surged in less than a decade. Steam rising from a mine at the Athabasca oil sands near Fort McMurray, Alberta.Clearwater production rose from 30,000 barrels a day in 2017 to 230,000 barrels a day last year, and the formation holds 1.6 billion barrels of oil, AER said last year, citing work by McDaniel & Associates Consultants Ltd.Figures citing the total volume of output depend on how Clearwater, which encompass a vast area including some thermal oilsands sites, is defined. For example, Headwater’s Magee defines Clearwater production in more limited terms. He cited the play as currently producing about 175,000 barrels a day, and sees it growing to as much as 250,000 barrels a day by decade end.The multitude of Clearwater producers has drawn consolidation in the past, including Tamarack’s takeover of Deltastream Energy Corp. four years ago. More such deals are on the horizon, Schmidt of Tamarack said.“There’s a number of smaller privates that don’t want to be in the game long,” he said. “There’ll be more consolidation in the Clearwater.” Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.