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Providing coverage of Alaska and northern Canada's oil and gas industry
June 2007

Vol. 12, No. 23 Week of June 10, 2007

Western Canada gas — two points of view

Gary Park

For Petroleum News

A 50 percent rise in production from Western Canada’s coal seams and tight gas deposits will not be enough to offset declines in conventional output over the next eight years, Ziff Energy Group said in a production outlook to 2015.

That put the North American gas consulting firm at odds with Alberta Energy Minister Mel Knight, who suggests the province has access to another 20 years of recoverable conventional gas or 100 trillion cubic feet at current rates of production.

If that’s not sufficient to dispel the gathering glom over Alberta’s prospects, Knight said the Alberta Geological Survey believes coalbed methane could yield an additional 500 tcf.

To further bolster his upbeat view, he said tight gas production is barely in its infancy, with more than 400 tcf yet to be produced.

And shale gas, which hasn’t even been tapped, could hold 1,000 tcf of resources, only 10 percent of which would double the conventional gas available in Alberta, Knight said.

Underpinning his confidence is a belief that rising demand and technological breakthroughs, which have produced major results in U.S. coalbed methane, tight gas and shale gas plays, will do the same in Alberta.

Once the owner of an oilfield service company, Knight said the gas sector served him well for 40 years and will serve current and future generations of Albertans for at least another 40 years.

Ziff report predicts decline

The Ziff report poured a heavy dose of cold water on Knight’s predictions.

Western Canadian gas production last year averaged 16.6 billion cubic feet per day — 78 percent from conventional sources, 10 percent from tight gas, 9 percent from solution gas and 3 percent from coalbed methane.

By 2015, Ziff predicts output will have declined 20 percent to 13.1 bcf per day, 63 percent from existing and new conventional gas, 14 percent each from coalbed methane and tight gas and 9 percent from solution gas.

The study expects 2,000 coalbed methane wells will be drilled in the region in 2010, slipping under that level by 2015.

Although the reserve life of wells is 50 to 100 years, the average coalbed methane well produces just 100,000 cubic feet per day, requiring intensive drilling to significantly raise production levels.

Tight gas could offer 100 years of reserve life, but — because wells are complex and costly — Ziff does not expect current output of 1 bcf per day will ever rise to 10 bcf per day.

Ziff: 14,000 wells per year needed

Ziff’s researchers say Western Canada will need 14,000 wells per year to counter shrinking well productivity, which has dropped over the past decade to 200,000 cubic feet per day from 750,000 cubic feet per day, translating into drilling almost four wells today to match one well of 10 years ago.

To alter that balance, hopes are being pinned heavily on technological gains, including four-dimensional seismic to give producers a better insight into which portions of a reservoir have been emptied.

There have also been gains in finding gas, helped by seismic processing and reprocessing, with the dry hole rate down dramatically to 5 percent from 15 percent in the mid-1990s.

Of the seven strategy areas identified by Ziff, average productivity per well ranges from 1.5 million cubic feet per day in the Foothills area along the Canadian Rockies to 100,000 cubic feet per day in the shallow zones of southern Alberta and Saskatchewan.

But the Foothills is not seen as a major potential contributor to production growth because of drilling costs in a complex region.

The southern shallow area is forecast to see a decline in wells to about 5,000 in 2015 from 8,000 in 2006; northeastern Alberta is predicted to slump under 1 bcf per day by 2015 from 3 bcf per day in 2000; and central and west-central Alberta, despite coalbed methane activity, is expected to remain flat or decline, while accounting for more than one-third of Western Canada’s supply.






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