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

Low crude prices pressure Latin American producers, CSIS forum told

02/26/2015 Depressed crude oil prices are putting new pressure on Latin American producing countries to improve terms if they expect to attract outside invest...

Petroleum detected in fish tested after Yellowstone River pipeline spill

02/26/2015 Detectable levels of petroleum were found in tests of fish pulled from the Yellowstone River downstream from a broken petroleum pipeline near Glend...

Suriname bid round draws lackluster response

02/26/2015 The dramatic fall in oil prices is being blamed for the lack of interest shown by international oil companies (IOCs) in the deepwater offshore Suri...

House panel launches probe of DOS’s Keystone XL application process

02/26/2015 The US House Oversight and Government Reform Committee began an investigation of the US Department of State’s environmental impact statement for th...

Antero Resources cuts 2015 Marcellus spending vs. 2014

02/26/2015 Antero Resources Corp., Denver, said it plans to spend $1.6 billion during 2015 for drilling and completion activities in the Marcellus and Utica s...

Uganda announces tender for Albertine Graben acreage

02/26/2015

The virtually untouched Albertine Graben of Uganda may contain more than 6.5 billion bbl of oil resources according Ugandan officials.

BLM Utah office adopts USFS leasing analysis for Fishlake Forest

02/26/2015 The US Bureau of Land Management’s Utah state office will adopt the US Forest Service’s final environmental impact statement and record of decision...

MARKET WATCH: Crude oil prices gain on Saudi oil minister comments

02/26/2015 US light, sweet crude oil prices gained more than $1/bbl on the New York market Feb. 25 while Brent crude oil prices jumped by nearly $3/bbl on the...

Chesapeake’s $4-4.5 billion capex down 37% vs. last year

02/25/2015

Chesapeake Energy Corp., Oklahoma City, is budgeting total capital expenditures, including capitalized interest, of $4-4.5 billion for 2015.

White Papers

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

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

When Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

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