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Gas back in favor
Gary Park For Petroleum News
While it’s too soon to talk about a trend, there has been a low-key drift by explorers in Western Canada back to natural gas targets.
After several years of activity overwhelmingly directed at oil, the latest statistics released by the National Energy Board show the industry entered 2015 with 62 percent of rigs drilling for gas - an exact reversal of percentages from 2012.
In the 2000-08 period, before the precipitous plunge in gas prices seven years ago, conventional gas in Western Canada accounted for 73 percent of rig activity.
Then the unlocking of tight oil in various formations and the strength of oil prices combined with the slump in gas fortunes to see wells shut-in.
A number of factors are contributing to the current shift - notably strong returns from natural gas liquids and the drop in oil prices, plus stepped-up efforts to evaluate gas resources that might be needed to support LNG projects.
Yoho One of the hottest regions is the Duvernay formation in northern Alberta, with Yoho Resources posting impressing numbers from three of its wells that have been brought into production.
One of the wells has flowed 5.8 million cubic feet equivalent per day (55 percent gas) after 30 days, and another containing 63 percent gas has averaged 5.6 million cfe per day.
Yoho hired BMO Capital Markets eight months ago to assist with a strategic review of company assets and has attracted interest from several prospective buyers, although none have generated a formal proposal.
Yoho’s Duvernay portfolio includes an estimated 100-120 billion cubic feet of gas in place for every square mile, with liquids content at 50 to 200 barrels per thousand cubic feet. Average per well recoveries are calculated at 3 bcf of gas sales and 386,000 barrels of liquids.
Using pad drilling, the costs of drilling, casing and completing wells runs at C$10 million-C$12 million, using longer laterals.
Tourmaline Oil Tourmaline Oil has included strong gas numbers from its latest results in the Dawson-Doe area of northeastern British Columbia’s Lower Montney play after testing 10 widely spaced horizontal delineation wells.
Of those producing for more than a month, four yielded 30-day averages of 7.5 million cfe per day (29 percent condensate), or 70.5 barrels of condensate per well.
Tourmaline estimates it controls 234 undrilled horizontal locations on its existing lands in the area known as the Lower Turbidite, and expects the development could add up to 100 million cubic feet per day of gas and 10,000 bpd of condensate over the next five years.
The company’s 2015 guidance remains unchanged at 987 million cfe per day. It has 132 million cfe per day of production either shut-in or awaiting tie in.
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