CERI: Unconventional gas plentiful; technology a must

Jim Stott
Special Correspondent

CALGARY, Mar. 8 -- Conventional wisdom that US natural gas production is on a steady downward spiral was challenged Mar. 7-8 at a Canadian Energy Research Institute (CERI) natural gas conference in Calgary.

Vello Kuuskraa, president, Advanced Resources International Inc. (ARII), said a number of respected industry analysts claim that US domestic supplies have peaked and are in terminal decline.

He said the logical implication is that for the near term, there are few options besides accelerating construction of an Alaskan gas pipeline and dramatically increasing imports of LNG to meet expected demand growth.

Kuuskraa said the US is not running out of natural gas, only shallow and easy-to-find-and-produce gas. The speaker said there are massive volumes of gas that still remain locked in domestic reservoirs, primarily tight gas sands, gas shales, and coalbed methane basins. In addition, he said, deep gas resources, onshore and offshore, remain undeveloped.

Kuuskraa said 8 of the top 12 gas fields in the US are now unconventional fields. He said more-advanced knowledge and improved technology are increasing recovery rates from unconventional gas reserves. Intensive drilling for coalbed methane (CBM) projects produce much higher recovery rates than traditional well spacing.

"Rumors of a terminal decline in gas production have been greatly exaggerated," the speaker concluded.

WCSB prognosis
Dave Flint, Pres., Forward Energy Group Inc., said Canada's Western Canada Sedimentary Basin (WCSB) will continue to be the main gas supply area in Canada, but annual gas production from the basin has been essentially flat since 2000. In 2003, it produced 16.5 bcfd, 23% of Canadian and US consumption.

Flint asked if the current production from the WCSB is sustainable or "is the sky falling?"

The speaker said a fine balance exists between a decline in production from old wells and the annual production replacement rate from new wells on stream. More than 3.5 bcfd of new productive capacity must be added each year to replace natural decline.

"Careful examination of the trends behind alarmist headlines leads us to believe that the opportunity set has expanded. This has been driven by increased gas prices and netbacks. However, we observe a trend of increasing F&D costs, that, if unchecked, threatens to choke off reinvestment and production replacement in the WCSB," Flint said.

The Forward Energy executive said the treadmill has speeded up, and the effort required to replace production has increased. The number of wells connected has increased to record levels but most are shallow wells drilled by a large fleet of shallow rigs and coiled-tube drilling units. He said outlook for the basin is positive for unconventional gas and improving technology.

Flint said the cost of replacing production and reserves in the WCSB has increased rapidly and, if unchecked, is the greatest threat to sustainable gas supply. He said some Canadian producers are already "voting with their pocketbook," and gas reinvestment in the WCSB is less than 80% of cash flow. Remaining cash flow has been invested in oil sands projects and in other basins, distributed to investors in trusts and used to buy back shares.

Alberta's outlook good
The conference was given a positive outlook on long-term gas potential in Alberta in a study produced by two of Canada's senior energy regulators.

The joint study by Alberta's Energy Utility Board and the National Energy Board increased ultimate gas potential for Alberta by 12% from a 1992 study.

The two boards estimated low-case ultimate potential at 205 tcf, medium case at 223 tcf, and high case at 253 tcf. Ultimate potential remaining is estimated at 101 tcf.

EUB analyst Cal Hill said the study does not include an economic analysis or any data on CBM potential, an area that is seeing rapidly increased drilling activity in Alberta. However, he said the study indicated that Alberta would continue to be an important supplier for decades. He also lauded the study as an important joint venture between the two agencies to improve regulatory efficiency.

Alberta Energy Minister Greg Melchin told the conference the energy industry in Alberta is not a sunset industry but one that has "centuries of opportunity."

He noted that Alberta's oil and gas industry provides 300,000 jobs and accounts for 30% of provincial revenues. The province has massive reserves of oil sands, coal, and coalbed methane. Alberta's oil sands have been recognized as the second-highest proven reserves in the world, with 176 billion bbl of recoverable reserves, he said. These can be increased even more substantially with improved technology, he added. Melchin said the opportunities for CBM development in Alberta are just beginning.

The energy minister said Canada's four western provinces and its two northern territories are working towards increased harmonization of energy regulations and to promote Canada's north and west regions as one big energy supplier.

Melchin said Alberta also wants to work cooperatively with industry to ensure that Arctic gas from Alaska and Canada's Mackenzie Delta can be connected to an Alberta pipeline distribution hub to continental markets.

Contact Jim Stott at stottj@telus.net.

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

Quicksilver Canada gets LNG export approval

07/02/2015 Quicksilver Resources Canada Inc. has received approval from the National Energy Board of Canada to export 20 million tonnes/year of LNG from a pos...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Origin lets contract for Otway basin fields

07/02/2015 Origin Energy Ltd., Sydney, has let a $1.3 million (Aus.) contract to Wood Group Kenny for provision of a detailed engineering design for the onsho...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...
White Papers

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by
Available Webcasts


The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.

register:WEBCAST



On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors

register:WEBCAST


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP, http://go.sap.com/solution/industry/oil-gas.html

register:WEBCAST


OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected