Hot new Alberta oil play draws drillers seeking a cheaper, greener crude

financialpost.com:

A hot spot for Canadian oil drillers is emerging in a tiny corner of eastern Alberta, drawing companies including Canadian Natural Resources Ltd. and Baytex Energy Corp. in search of cheaper, lower-emissions heavy crude.

Oil drillers have applied for 81 licences to drill into the so-called Waseca formation so far this year, 30 more than in all of 2022. That’s the biggest increase in any oil and gas formation in the province this year, according to regulatory data.

The formation holds heavy oil about 400 metres beneath Alberta’s soil near the oilsands region of Cold Lake. But, unlike the oilsands, the Waseca can be tapped with conventional drilling gear that costs less and generates lower emissions because steam isn’t needed to make the crude flow.

“The play is definitely taking off,” said Kendall Arthur, general manager of the Canadian heavy-oil business for Baytex, which has drilled two wells into the Waseca this year and plans to complete a total of five by year end.

While the oilsands can require billions of dollars of upfront investment and years to establish production, a conventional heavy-oil well can be brought online in a few months at a fraction of the cost. They’re also more environmentally friendly than the oilsands, which produce some of the highest carbon emissions in the world per barrel.

“It’s much cheaper oil to extract, which is why companies are attracted to it,” Jonah Resnick, a Calgary-based research analyst for Wood Mackenzie, said by phone.

The Waseca is similar to the Clearwater formation, also in Alberta, which has been the most heavily drilled play in the province for the past several years in fields such as Marten Hills and Nipisi. Unlike Clearwater, Waseca is in its early days, Resnick said. A