Technology keeps hope alive in Western Canada Sedimentary Basin

Finding enough natural gas to sustain flows from the Western Canada Sedimentary Basin is a tough job, but the hope that drives explorers is still alive, bolstered by new seismic and drilling technologies.

It is becoming “harder than ever” to uncork “good gas wells,” said FirstEnergy Capital analyst Steven Paget in a new research note.

“High-production gas wells are getting fewer and further between” and the quality of the top wells has declined since 2002, he said.

FirstEnergy estimates the average initial production of the 25 best wells in the basin in 2005 was 10 million cubic feet per day, off 10 percent from 2004 and 25 percent from 2002.

Tay River discovery fuels optimism

What fuels optimism, however, is the 2004 Tay River discovery in Alberta by Shell Canada.

Ranking among the top three finds of the last 20 years, but still outside the top 25 wells logged in the basin’s history, it started producing last May at 23 million cubic feet per day from reserves of about 800 billion cubic feet.

Shell has since added new well tubing and added to a processing facility to boost output to 95 million cubic feet per day (57 million cubic feet per day after removing sulfur), generating daily revenues of about C$340 million.

The company has also started a second exploration well in the Tay area along with a separate well to evaluate the size of the first discovery.

What fuels hope is the proprietary seismic Shell used to identify the formation in the Foothills region of the Canadian Rockies, viewed as one of the best bets for keeping the basin productive.

—Gary Park