Canada is enjoying an unexpected boom in production of ultra-light crude known as condensate, defying long-held predictions of dwindling supply.
CALGARY, Alberta, June 6 (Reuters) - Canada is enjoying an unexpected boom in production of ultra-light crude known as condensate, defying long-held predictions of dwindling supply.
This surprising bounty from one corner of Alberta, better known as the home to Canada's vast tar-like oil sands reserves, is a boon for firms like Vermilion Energy Inc and Chevron who have built up positions in the Duvernay, now hotly tipped as one of North America's most exciting shale plays with vast reserves waiting to be tapped.
It also is fuelling hope of cost relief for traditional heavy oil sands companies such as Cenovus Energy Inc, who in the past have paid premiums of up to $25 a barrel to buy imported condensate used to dilute their viscous oil sands production so that it can flow through pipelines.
The change in outlook has been abrupt. A year ago, the Canadian Association of Petroleum Producers expected condensate production to shrink from 139,000 barrels per day to barely 100,000 bpd by 2025, according to its annual forecast.
The group's updated forecasts, due out next week, will likely show a very different trajectory, according to Greg Stringham, vice president of oil sands and markets.
"(Condensate) had been in decline. We are now seeing relatively strong growth," he said. He declined to give exact numbers until the report is released on Monday. In April, Canada's National Energy Board said it expected output to rise 13 percent this year to 172,000 bpd.
While the growth is modest compared to the shale revolution that is upending the U.S. industry in places like North Dakota and Texas, its impact may reverberate far south of the border.
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