Alberta issued 1,764 drilling licenses between the start of 2026 and June 12, the highest count for a comparable period since 2014, according to provincial data. Nearly one in five permits targeted the Clearwater formation, the largest share on record, as oil producers shift away from long-cycle oilsands projects to a low-cost conventional play that enables rapid supply increases.
Clearwater Production Surges
Clearwater production rose from 30,000 barrels per day in 2017 to 230,000 barrels per day in 2025, according to industry data. The formation yields dense, high-sulfur crude oil similar to oilsands crude but can be extracted at lower cost using conventional multilateral drilling without steam injection, allowing faster development.
“It doesn’t take a whole bunch of capital to get started, and therefore it’s quite cost efficient,” said Brian Schmidt, chief executive of Tamarack Valley Energy Ltd., one of the two largest Clearwater producers. “It’s phenomenal. There’s no conventional play that compares.”
Drilling License Boom
Tamarack received 89 drilling licenses in 2026 through June 12, up by 37 from the same period in 2025, the biggest increase of any company in Alberta, according to the Alberta Energy Regulator. Wells targeting the Clearwater accounted for 80 of those licenses, second only in volume to privately-held Spur Petroleum Ltd.
Once considered small players, Spur Petroleum and Tamarack have risen into the top 10 oil producers in Alberta, rivaling some oilsands companies. Tamarack sold its position in the Charlie Lake region for $804 million in May to focus entirely on the Clearwater. Schmidt said the company has made “modest” increases in its capital budget to between $430 million and $450 million.
Impact of Iran War on Oil Prices
The Iran war exposed the vulnerability of global oil supplies, giving Alberta producers the opportunity to respond to higher prices with new production in months rather than years. Headwater Exploration Inc., another major Clearwater producer, increased its capital budget to $250 million from $185 million after raising its forecast oil price by more than US$15 to US$78.85 per barrel amid the conflict.
Headwater’s production will grow by 10% in 2026, up from an earlier forecast of 8%. Most growth comes from investing in equipment to inject water into the reservoir, which roughly doubles the amount of oil that can be recovered at less than double the cost per well, said Jeff Magee, the company’s vice president of engineering.
Clearwater Attracts Major and Small Players
The formation has attracted some major producers, including Canadian Natural Resources Ltd., Canada’s biggest oil company, but remains mostly the playground of smaller firms. The advent of multilateral, horizontal drilling has made the Clearwater viable, and producers have been injecting water to boost output.
For decades, Canada’s oil industry was defined by the oilsands, where multi-billion-dollar projects take years to build. Clearwater is changing that equation, allowing producers to bring new supply online quickly and cost-effectively.
