Growth Rate Moderates Within Canada’s Clearwater Play

Is the top tier inventory exhausted, or is there growth remaining with multilateral development?

Multilateral wells have transformed Canada’s Clearwater and Lloydminster Mannville plays, among others, into some of the best resource plays in North America today. Starting in 2017, steady development has led to an aggregate production rate of more than 170,000 bbl/d (Figure 2) of medium to heavy crude oil from the Clearwater play located in central Alberta and the Lloydminster Mannville play located in eastern Alberta and western Saskatchewan.

In search of shallow drilling targets, operators have stayed for the great economics. For the price of an 8-well Permian pad, operators in the Clearwater and Lloydminster Mannville plays could drill dozens of multilateral wells at a cost of $1.1 – $1.9 million CAD per well. And instead of a 10,000 – 20,000ft single lateral length of deep unconventional wells, Clearwater and Lloydminster Mannville multilaterals combine to create an overall lateral length of 30,000 to 50,000 ft and leverage geometric wellbore designs to maximize reservoir contact.

Typical Clearwater breakeven costs hover around $40 WTI with assets in the Peavine region with the best economics and the Jarvie and Figure Lake regions having the most expensive breakevens. The Marten Hills Central, Marten Hills West and Nipisi sub-plays in the Clearwater generally also offer sub-$40 WTI breakevens.

Just three operators in the Clearwater account for ~70% of total multilateral development today while a single operator dominates in the Lloydminster Mannville with a 50-60% compound annual growth rate since the start of 2022. Only seven years after multilaterals breathed life into these plays, a crack may already be forming in the strong growth. Let’s look at the epicenter for the recent decline in productivity and what it means for the future of multilateral wells in the region.

Marten Hills East, Where It All Started

Early Clearwater development focused on the Marten Hills East region. In early 2023, there was a notable plateau and then definite decline in production.

Once home to some of the best performing multilateral wells in the Clearwater, the performance drop off can be attributed to dwindling top tier drilling inventory. Infill drilling and secondary tier targets still exist but the breakevens are not as attractive as other plays or sub-plays within the Clearwater or Lloydminster Mannville. Capital that is deployed in Marten Hills East is largely being spent on water flooding to squeeze as much productivity as possible.

The epicenter of early development and early decline, the production profile of Marten Hills East is now on par with other parts of the Clearwater play, which just goes to show how strong of a run the region has had.

What’s Next for the Clearwater and Lloydminster Mannville Plays?

So far, the other regions in the Clearwater and Mannville are not showing as rapid of a shift in production decline as Marten Hills East. However, this region is likely an analog for the other similar plays, so we would expect to see indications of aggregate production level flattening over the next three years across the fairway spanning Marten Hills Central, Marten Hills West and Nipisi. At Wolf Lake (Lloydminster play), despite the presence of multiple operators in the play, the bulk of production growth is being driven by one producer focused on development. Here, the operator is drilling the highest quality wells in the region with an estimated ultimate recovery to lateral length of 7bbl/ft.

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