Who says price isn't a rationing mechanism?
Rather than sink billions into long-term oil sands projects, Alberta energy companies are increasingly chasing the Clearwater formation, a conventional heavy oil field that allows producers to capitalize on rising crude prices far more quickly, according to Bloomberg.
The surge in activity has been significant. Alberta approved 1,764 drilling licenses between Jan. 1 and June 12, the busiest start to a year since 2014. Roughly one-fifth of those permits were for Clearwater wells, marking the highest proportion ever recorded.
The formation is increasingly changing how producers respond to higher oil prices. Traditional oil sands projects often require years of planning, construction, and billions of dollars before generating a single barrel of crude. Clearwater, by contrast, produces a similar heavy grade of oil using horizontal multilateral wells, eliminating the need for expensive steam-assisted extraction and allowing companies to ramp up output much faster.
According to Tamarack Valley Energy CEO Brian Schmidt, the economics are hard to beat. "It doesn't take a whole bunch of capital to get started," he said, calling the play one with no equal among conventional oil fields.
Bloomberg writes that Clearwater's rapid growth has helped elevate several smaller companies into major players. Tamarack Valley and privately
