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Petroleum News: Sand beats land in Canadian sales

Sand beats land in Canadian sales
For the first time in any three-month period, oil sands edged out conventional properties in Western Canada government auctions of exploration rights.

The northern Alberta swamps attracted spending of C$860.15 million on 428,868 hectares (1.06 million acres) in the opening quarter — 10 times greater than in the same period of 2005 — just over half the C$1.69 billion spent by companies across Canada.

The deciding factor was the C$467.7 million spent by Sure Northern Energy, a subsidiary of Shell Exploration & Production of the Americas, on 10 parcels in a new bitumen play.

Fort Hills Energy, created by UTS Energy to develop the Fort Hills asset in partnership with Petro-Canada and Teck Cominco, was a distant second, investing C$48 million for one parcel.

But Fort Hills distinguished itself by forking over an average C$22,091 per hectare, compared with the three-month average of C$2,006, although even then the premium prices easily outstripped first quarter averages for oil sands rights of C$318 in 2005 and C$107 in 2003.

It wasn’t all oil sands in Alberta, where the combined average of C$1,182 per hectare more than doubled last year’s C$512.

As usual, Alberta led the pack, pumping C$1.53 billion into government revenues, followed by British Columbia at C$125.13 million, Saskatchewan at C$35.9 million and Manitoba at C$983,640.

—Gary Park

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