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The answer is unconventional Study says Canada must turn to coalbed methane, tight gas, shale gas, gas hydrates to meet domestic, U.S. demands by 2025 Gary Park For Petroleum News
If Canada is to meet its domestic gas needs and maintain current levels of exports to the United States by 2025 there is a crucial need for a “coordinated and aggressive effort” by industry and government to exploit unconventional technologies, says a new study.
The Petroleum Technology Alliance of Canada, an industry-wide association which collaborates on research and development, said that requires a 25 percent increase in current production to 7.5 trillion cubic feet a year (20.5 billion cubic feet per day), with about 40 percent coming from unconventional sources — coalbed methane, tight gas, shale gas and gas hydrates.
Meeting the target requires an “integrated strategy comprised of an appropriate fiscal and regulatory environment, sustained funding for advanced research, development and demonstration and the proactive deployment and application of technology,” said the report, entitled Filling the Gap.
Underscoring the urgent need for action, the report notes that Canada exports half of its current daily output of 16.4 bcf per day, but, as a result of long-term declines, conventional gas production will be able to meet only domestic needs in 2025. Even if proposals to develop Mackenzie Delta and Beaufort Sea gas are realized, known conventional resources will go into decline over the next decade, PTAC said.
Canadian output could slide to 5.3 tcf in 2020 A recent Natural Resources Canada paper forecast Canada’s gas output could slide to about 5.3 tcf a year in 2020.
But PTAC conceded that resorting to unconventional production poses significant challenges to handle concerns about disruptions to existing land use, the visual impact from relatively dense well spacing and protection of fresh water supplies.
However, the study noted that the U.S. has shown the way after its conventional output peaked in the 1980s.
The unconventional gas sector is now responsible for about 30 percent of total U.S. domestic gas supply, with help coming in the early years from government incentives.
The one alternative against which unconventional gas will compete based on associated supply costs is imported liquefied natural gas, PTAC said.
“However, considerations such as security of supply and a desire to keep existing natural gas infrastructure filled by domestic production makes foreign offshore supplies less desirable for Canada,” the study said.
At the same time, access to that infrastructure will give unconventional gas a competitive edge that may overcome the anticipated higher production costs, PTAC said.
The importance of gas in the Canada economy was underscored by study estimates that current production is equivalent to about 3 million barrels per day of oil on an equivalent energy basis and represents 3 to 4 percent of Canada’s gross domestic product.
The report contains proposals for funding and organizing joint government-industry research and development.
Study recommends technological advances It recommends that governments look for ways to promote technological advances in the industry and more complete resource extraction and calls for the establishment of assured and stable funding for unconventional gas research and field development.
The study said that conventional gas has been the mainstay of Canada’s gas supply because it requires relatively modest costs for well completions and gathering.
In contrast, unconventional gas may need significant technical expenditures to unlock the gas from the reservoir, including artificial stimulation to gain and maintain production.
But the roadmap points to the vast prize available in the four unconventional resources, estimating combined gas-in-place at more than 4,000 tcf compared with the ultimate potential for remaining conventional gas at 370 tcf (145 tcf in the Western Canada Sedimentary Basin, 116 tcf in northern Canada, 90 tcf in the East Coast offshore, 17 tcf on the West Coast and 2 tcf in Ontario and the Maritime provinces).
The breakdown for unconventional gas-in-place lists the lowest estimate for gas hydrates at 1,540 tcf, tight gas at 1,500 tcf, shale gas at 550 tcf and coalbed methane at 539 tcf.
But the report notes that Canada’s National Research Council has calculated hydrate-based gas-in-place at anywhere from 1,540 tcf to 28,500 tcf, pointing to a much lower understanding of the resource and the technology that is necessary.
“As industry gains more knowledge of unconventional gas recovery technology and its application, a similar ‘ultimate potential’ estimate for unconventional gas will be determined, but is expected to be very significant,” the report said.
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