Alberta drilling effort better than expected

Jan. 5 (UPI) -- The provisional results from a drilling effort in an oil basin in northwest Alberta came in better than expected, London-listed Cabot Energy reported.

The company said Friday the output from its second sidetrack well in the Rainbow basin in Alberta, drilled in December, came in better than expected, though it would wait until later in the month to update its guidance.

"This is the company's second sidetrack well and the results have again exceeded expectations," CEO Keith Bush said in a statement."These higher production rates will further improve the robust economics of the project."

A sidetrack well is one deviating from the original well, potentially in order to tap nearby reservoirs.

The company estimates the proven and probable reserves in the Rainbow area are around 1.9 million barrels of oil equivalent, though production rates so far have been low. Reserve estimates are nevertheless 600 percent higher than forecast two years ago.

Canada is the third-largest producer in the world that's not a member of the Organization of Petroleum Exporting Countries, with output at around 4.4 million barrels per day. Analysis last year from consultant group Wood Mackenzie said oil production beyond 2017 will be incremental, but "relentless."

Most Canadian projects can break even so long as the price of oil stays around $60 per barrel. The price for West Texas Intermediate, the U.S. benchmark, was near $62 per barrel early Friday.

Cabot said the next phase of development involves as many as 10 new wells this year.

The type of oil found in Alberta is carbon-intensive and the provincial government is working to offset the environmental burdens with sweeping climate and renewable energy initiatives. Hobbled by lower oil prices and wildfires in 2016, Alberta's economy is on pace to show a growth rate of gross domestic product of 4 percent for 2017.