A pumpjack works at a well head on an oil and gas installation near Cremona, Alta., Saturday, Oct. 29, 2016. A key indicator of future oil and gas drilling activity in Western Canada is sliding lower as the industry deals with a lack of pipeline capacity, Alberta oil production curtailments and difficulty accessing capital markets. THE CANADIAN PRESS/Jeff McIntosh

Alberta drilling rights auctions post record low returns for province

key indicator of future oil and gas drilling activity in Alberta has fallen to a 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 oilpatch spending.

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.

The Canadian Press

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