Presentation to the NATIONAL BUYER / SELLER FORUM March 24, Brad J. Hayes Petrel Robertson Consulting Ltd.

Transcription

1 Presentation to the NATIONAL BUYER / SELLER FORUM March 24, 2010 Brad J. Hayes Petrel Robertson Consulting Ltd.

2 Canada s Gas Resources the Picture in 2010 This gas resource picture is only a snapshot because technology is rapidly making more resources available Most gas production to date, in Canada and world-wide, has been from conventional reservoir rocks, in traditional producing areas Unconventional reservoirs offer huge new potential Much of this potential occurs in areas new to the oil and gas industry which require new facilities and infrastructure

3 Conventional Reservoirs Conglomerate (gravel) Sandstone

4 Conventional Reservoirs Rocks with sufficient porosity and permeability to flow oil and gas at economic rates, from a traditional vertical well Conventional reservoirs have been the focus of industry until recently Pore space 1 mm Sand grain Microscopic thin section from a conventional sandstone gas reservoir, west-central Alberta

5 Conventional Reservoirs - Reserves MARKETABLE NATURAL GAS RESERVES (TCF trillions of cubic feet) NWT 1 WCSB 226 ONTARIO 1.5 E COAST OFFSHORE 1.8

6 Conventional Reservoirs - Production ANNUAL NATURAL GAS PRODUCTION (TCF trillions of cubic feet) NWT 0.01 WCSB 6.7 ONTARIO 0.01 E COAST OFFSHORE 0.16

7 Unconventional Reservoirs Three main types, and Canada has an abundance of each: Tight (low permeability) gas sands Recognized in late 1970 s western Alberta (Deep Basin) and NEBC Intensive development began in early 2000 s Potential elsewhere is not well understood Hot new play Montney (B.C. and Alberta) Coalbed methane (CBM) gas from coal beds Alberta, B.C., Nova Scotia thick, high-rank coals Intensive development in Alberta in late 1990 s, but has leveled off with declining prices Shale gas Historical development in U.S., very intense in past 5 years Prospective, but undeveloped, in many areas of Canada Hot new play Horn River Basin (N.E.B.C.)

8 Unconventional Reservoirs Tight Gas Sands Nikanassin Formation Low-permeability sandstone Very fine-grained small pore throats Heavily cemented silica cements Solution features stylolites Brittleness causes fracturing Fracture Stylolite Nikanassin core sample, west-central Alberta

9 Unconventional Reservoirs Tight Gas Sands Pore spaces Pore spaces are small and isolated compared to conventional reservoirs Sand grains are tightly cemented together Hydraulic fracturing (frac job) generally required to establish economic gas flow rates Microscopic thin section from a tight gas sand, west-central Alberta

10 Unconventional Reservoirs Coalbed Methane (CBM) Coal seams Surface coal mine (Alberta EUB photo)

11 Unconventional Reservoirs Coalbed Methane (CBM) Gas is contained in coal seams: Within matrix porosity Adsorbed onto organic material Within cleats (fractures) Many coals contain water Initial production involves de-watering before gas will flow

12 Unconventional Reservoirs Shale Gas Blackstone Shale, Ram River Falls

13 Unconventional Reservoirs Shale Gas Alberta Geological Survey Shales consist largely of very fine clay minerals, with very small, poorly-connected pore spaces Gas will not flow without special treatment to increase permeability optimal treatments must be developed for each shale gas reservoir, as each is unique We do not fully understand how gas is contained in shales, or how to evaluate and measure it Scanning Electron Microscope image, shale gas reservoir

14 Distribution of Canadian Gas Resources RESOURCE TRIANGLE CONVENTIONAL Exploitation of conventional gas resources has allowed us to access only the upper apex of the Resource Triangle UNCONVENTIONAL Economic access to unconventional gas resources will greatly increase the total volume of available gas resource

15 Distribution of Gas Resources PROJECTED GAS IN PLACE (TCF trillions of cubic feet) MACK-BEAUFORT 67 WESTERN ARCTIC 44 CONVENTIONAL (820) CON NWT/YUKON 76 LABRADOR SHELF 24 WCSB 482 E COAST ONSHORE 41 ONTARIO 5 E COAST OFFSHORE 81

16 Distribution of Gas Resources PROJECTED GAS IN PLACE (TCF trillions of cubic feet) CONVENTIONAL (820) TIGHT GAS (1180 +) CON CAMBRIAN CHINKEH MONTNEY 700 JEAN MARIE 50 DEEP BASIN 430 ALBERT

17 Distribution of Gas Resources PROJECTED GAS IN PLACE (TCF trillions of cubic feet) CONVENTIONAL (820) TIGHT GAS (1180+) CBM (663) CON BC BASINS 84 WCSB 500 MARITIMES 79

18 Distribution of Gas Resources PROJECTED GAS IN PLACE (TCF trillions of cubic feet) ARCTIC ISLANDS CONVENTIONAL (820) TIGHT GAS (1180+) CBM (663) SHALE CON GAS (1230+) NWT CRETACEOUS BESA RIVER NWT DEVONIAN HORN RIVER CORDOVA 700 WCSB VARIOUS > 250 ONTARIO PALEOZOIC UTICA > 150 HORTON BLUFF > 130

19 Gas Development Strategies Conventional gas reservoirs are typically developed by drilling one well every square mile (one well/section) Reflects high permeability gas can flow a long way to the wellbore Unconventional gas reservoirs have lower permeability Well spacing must be closer (denser) for adequate drainage Multiple zones may be commingled Horizontal wells can contact more reservoir area Hydraulic fracture stimulation (fracs) needed in both vertical and horizontal wells to enhance permeability

20 1 section = 1 mi 2 Gas Development Strategies Conventional 1 well/section Tight Gas (Alberta Deep Basin) Downspacing to 4-6 wells/section Commingling up to 12 zones / well

21 3900m Tertiary Scollard Wapiti Belly River Chinook Gas Development Strategies (Tight Gas Alberta Deep Basin) Cardium Dunvegan Paddy Cadotte Harmon Notikewin Falher Wilrich Systematic commingling of multiple tight gas reservoirs in a single wellbore Each zone contributes to deliverability and reserves few would be economic on their own Gething Cadomin Nikanassin Triassic Note: Not to Scale Modified after Leroux 2004, 2006

22 Gas Development Strategies Horizontal Drilling Horn River Basin, N.E.B.C. Horizontal Well Multifrac Completions Packers Plus

23 How does Canada s Evolving Gas Resource Picture Impact Future Development Activity? Most of today s gas production is from conventional reservoirs in traditional producing areas especially WCSB Limited scope for additional development Most new wells will feed existing infrastructure Most of Canada s future gas resources are unconventional Technological advances have made unconventional gas reservoirs economically accessible Future production will come increasingly from unconventional reservoirs

24 How does Canada s Evolving Gas Resource Picture Impact Future Development Activity? Unconventional gas coming on stream now is in or near traditional producing basins New regional facilities and pipelines will be required to service new unconventional play areas Example Horn River Basin shale gas Cabin gas plant New and expanded pipelines into Fort Nelson area Future unconventional gas developments will require processing facilities and gathering systems in new areas Utica Shale (Quebec) Horton Bluff (New Brunswick)

25 How does Canada s Evolving Gas Resource Picture Impact Future Development Activity? Intensity of unconventional gas development will require a lot of equipment and material Downspacing a lot more wells Horizontal drilling prolonged and intensive drillings ops Some Horn River Basin rigs on a pad for up to 1 year Large frac jobs water, chemicals, proppant Issues regarding water supply and disposal e.g., Horn River Basin Sheer volume of unconventional gas coming onstream, both in Canada and the U.S., will change market dynamics Alternative marketing e.g., LNG exports from Kitimat

26 Brad J. Hayes Petrel Robertson Consulting Ltd.