NEB, EUB put Alberta's marketable conventional gas supply at 223 tcf

March 11, 2005
Canada's Alberta province has an estimated 223 tcf of marketable conventional natural gas supplies, according to a joint study by the Alberta Energy and Utilities Board (EUB) and the National Energy Board (NEB) released Mar. 9.

Sam Fletcher
Senior Writer

HOUSTON, Mar. 10 -- Canada's Alberta province has an estimated 223 tcf of marketable conventional natural gas supplies, according to a joint study by the Alberta Energy and Utilities Board (EUB) and the National Energy Board (NEB) released Mar. 9.

That latest estimate is up by 12% from EUB's last detailed study of Alberta's ultimate gas potential in 1992 and is 7% higher than the last NEB study released in 2004 and based on yearend 2000 data.

The two boards decided in 2001 that an updated estimate was required and collaborated on a joint study. The results were previewed earlier this week at a Canadian Energy Research Institute natural gas conference in Calgary (OGJ Online, Mar. 8, 2005).

"The primary reason for the increased ultimate potential is a better understanding of the geology of the province gained as a result of the increased drilling since 1992," the report said. "As a result, Alberta will continue to be the main supply region for Canadian gas demands." The number of wells drilled in Alberta has doubled since the 1992 EUB study and increased by almost 25% since the last NEB study, officials said.

Study findings
The latest study uses data from 320,000 wells drilled by December 2004. The NEB 2004 report was based on data from 250,000 wells drilled in Alberta by the end of 2000. A report in 2001 by the Canadian Gas Potential Committee (CGPC) on Canada's natural gas potential used data from 230,000 wells drilled by the end of 1998. EUB's 1992 report was based on data from 160,000 wells drilled by mid-1991.

However, the new estimate does not include unconventional gas, such as coalbed methane, the exploration and development of which is on the rise in Canada. "Although increased from earlier estimates, Alberta's remaining ultimate potential of marketable conventional natural gas will require supplements from unconventional gas supplies in order to continue to meet Canadian domestic and export demands. Extraction of both types of gas resources will contribute to a healthy and vibrant oil and gas industry in Alberta for many years to come," the report said.

Because of the "inherent uncertainty" in estimating geological prospects and predicting gas potential, the project team estimated a range for ultimate potential marketable conventional natural gas in Alberta at 205-253 tcf. The two boards adopted 223 tcf as the estimate both will use in future supply projections.

According to the report, Canada today accounts for one quarter of total North American natural gas production, with Alberta contributing nearly 80% of total Canadian gas production.

"Canada's ability to remain a key supplier of natural gas will depend on the size and quality of its resource base," the report said. Despite recent record levels of drilling in Alberta, it said, "Reserves growth has been unable to match production, and Alberta appears to have reached, or at least is very near, its peak capacity. Consequently, there is significant interest in Alberta's ultimate potential for marketable conventional natural gas."

Study definitions
The term "ultimate potential" refers to an estimate of the volume of marketable gas reserves that will be proven to exist in a geological basin or in a specific area after exploration has ceased, "having regard for the geological prospects of that area and anticipated technology and economic conditions," the report explained.

The boards acknowledged, "A large number of wells have been drilled in development areas to maintain contract rates and were not for exploratory purposes." They said, "Increases in gas prices have resulted in the exploration for and development of many new low-productivity pools that were previously beyond economic reach."

The report deals only with "gas from clastic and carbonate reservoirs where recovery is possible with technological improvements and prices that can be reasonably anticipated." It "does not specifically deal with the economics of discovering, developing, or producing Alberta's gas resources. Nor does it deal with the rate of discovery or productive capacity for natural gas. This report and the associated data are intended to form the basis for economic analysis and supply projections by the EUB, NEB, and others," officials said.

The study began in mid-2001 and continued through 2004. "The project team did not request formal input from industry in the form of a public hearing or proceeding for this study. However, informal discussions were held with various operators active in the foothills area in order to gain further insight into this geologically complex area. In addition, a limited peer review was conducted with staff from the CGPC and the Earth Science Sector of Natural Resources Canada," officials said.

Contact Sam Fletcher at [email protected].