Alberta Hits Pause on Oil and Gas Rights Sales

Citing “challenges currently facing” the province’s energy sector, Alberta’s ministry of energy said April 9 it would defer all public offerings and direct purchases of oil and gas rights on government land for at least 90 days.

“After this period, Alberta Energy will re-evaluate the deferral by determining if the business environment has sufficiently improved for land sales to resume,” the ministry said in a statement.

Traditionally held every two weeks, and including land postings from oil and gas companies on rights they would be interested in bidding for, the offerings – referred to as land sales – have taken a beating in recent years as interest in exploration in the province has evaporated.

In 2019, the twice-monthly auctions generated total bonus bids of just C$119.3mn (US$85.4mn), down from C$405mn in 2018 and C$504mn in 2017. Bonus bids peaked at more than C$3.5bn in 2011.

The global oil market collapse brought on by the Covid-19 pandemic and the Saudi-Russia price war has only made the situation worse: the most recent auction, on April 1, attracted total lease and licence bids of just C$2.8mn. By comparison, the February 5, 2020 auction – the last before the declaration of the pandemic – attracted bonus bids of C$5.1mn.