By the OGJ Online Staff
HOUSTON, Feb. 28 -- PanCanadian Energy Corp., Calgary, and MGV Energy Inc., the Canadian unit of Fort Worth-based Quicksilver Resources Inc., said Wednesday that their coalbed methane joint venture in southern Alberta last month started production into sales lines, marking the "first significant CBM sales production reported in Canada," the JV said. Six wells on the block are producing gas, while others are still being flare tested.
The JV also will begin planning a proposed 250-well CBM development on its 1 million acre Palliser Block in southern Alberta. The two firms increased their capital program for the project late last year to $30 million (Can.) from $15 million (OGJ, Nov. 19, 2001, Newsletter, p. 8). In addition, the JV last year announced plans to expand its project beyond Palliser but did not identify which other blocks would be involved, saying only that they were PanCanadian-owned blocks that were "mostly in southern Alberta."
"With the success of the program to date, PanCanadian continues to view coalbed methane as having the potential to be a major new source of natural gas supply from the Western Canadian Sedimentary Basin," said Gerry Protti, PanCanadian's senior vice-president, new ventures.
Project details
To date, the JV has drilled 95 wells, which include 25 exploration and 58 pilot wells on the Palliser Block. Presently, these shallow wells—at depths less than 1,000 m—are in "various stages of production testing," the JV said. More than 1 km of core has been collected from the exploration wells, the companies added.
The JV estimates "anticipated stabilized flow rates" from each well in the development at 30-250 Mcfd of gas. According to initial test results, net reserves on the block could be 1-2 bcf of natural gas per section, the JV said. Palliser Block comprises 300 sections, which represents about half of the JV's total acreage. In addition, PanCanadian holds interests in assets outside the JV structure—both on Palliser Block and in surrounding areas.
"Unlike most other large CBM developments, a unique set of geologic features in the Palliser Block results in low water production rates," the JV said. Together with extensive gas infrastructure already in place, these low water rates "significantly reduce" capital and operating costs, the JV noted.
Outside the Palliser area, the JV said it has drilled 12 of a proposed 25 exploration wells in central and southern Alberta and has started completing and testing these wells.
"Early results are mixed, with encouraging results in some areas," the JV said. This year, the venture will drill the remaining 13 exploration wells and "at least four 4-well pilot programs." This pilot process will be repeated as each exploration well's results are evaluated, the companies said.