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Coalbed methane goes flat in Alberta
Gary Park For Petroleum News
Coalbed methane, once tagged as a vital new source of gas in Canada, has gone quiet, drowned out by the clatter surrounding shale gas.
And Calgary-based consulting firm Ziff Energy Group believes coalbed methane volumes will remain flat as activity is diverted to British Columbia’s Montney and Horn River plays.
Ed Kallio, Ziff’s manager of gas consulting, told a seminar there is so little upside that coalbed methane will just “hold its own.”
Ziff’s Chief Executive Officer Paul Ziff said southern Alberta’s Horseshoe Canyon coalbed methane play, the launching platform for production in Canada, is getting “pretty well drilled up,” while the deeper, wet Mannville coalbed methane needs either stronger commodity prices or a breakthrough to make it economic.
Production not yet at 1 bcf Quicksilver Resources, a Horseshoe Canyon pioneer, has said its capital investment is being shifted from coalbed methane to Horn River, reflecting the failure of the resource to climb above 1 billion cubic feet per day, far short of the several billion cubic feet once forecast for Western Canada.
Kallio said Horn River and Montney are able to reach the breakeven point at low gas prices and, although Horseshoe Canyon is a good play, it offers less opportunity than the hot spots in British Columbia.
Ziff Energy’s most recent study of Mannville coalbed methane estimated the play needed minimum gas prices of C$8 per thousand cubic feet to be economic, said the firm’s director of gas services, Simon Mauger.
He said the threshold has probably been lowered since that estimate, but it remains to be seen whether Mannville can be commercially viable.
Mannville is “not number one, two or three in terms of the cheapest types of plays,” said Ziff, who remains eager to see the wet coals take a larger role because of the huge Mannville potential.
Industry leaders have insisted that without Alberta government incentives Mannville coalbed methane and shale gas deposits will lag behind.
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