The petroleum industry needs to invest more in developing new technologies or Western Canada’s oil and gas production will dry up within a decade, says a senior executive at a global energy services firm.

If new oil- and gas-recovery technologies aren’t developed and utilized, conventional reserves in the Western Canadian Sedimentary Basin will be essentially depleted within 10 years, said David Ackert, regional vice-president, Canada, of Halliburton Energy Services. “We have some serious problems facing our industry,” Ackert told the Ziff Energy North American Natural Gas Strategies Conference in Calgary last week.

“We need to start recovering more of the resource.”

Alberta still has an estimated 1.6 billion barrels of established conventional oil and gas that are recoverable with current methods. Improved and new technologies, however, offer the potential to recover another 3.1 billion barrels.

Recovering just one per cent more of conventional oil would produce an additional 600 million barrels, adding almost $3 billion to government revenues, according to a recent report by Calgary-based Petroleum Alliance Technology Canada (PTAC).

Yet many companies aren’t interested in investing in developing or even deploying proven new technologies, Ackert said. He pointed to advances such as well-stimulation techniques that increase production, and software that can ‘steer’ a drilling bit toward its target in real time.

The oil and gas industry as a whole invests less than one per cent of its revenues in R&D, he noted. “You can’t run a serious R&D program on that.”

It takes an average 37 years for the oilpatch to take a new technology from the prototype stage to commercialization, Ackert said. In comparison, the information technology sector brings a new product to market in 18 months or less.

Ackert called for the oil and gas industry to establish more collaborative partnerships, especially between oilfield facility operators and service companies, to enable testing of more new technologies in the field.

Even with new technologies, Alberta’s coalbed methane (CBM) resource will be technically difficult and expensive to develop, says the head of a leading CBM developer in the province.

“Despite the promise of CBM, there are some storm clouds on the horizon,” Jon Baker, president and CEO of Calgary-based Trident Exploration Corp., told the conference.

Baker says while CBM production could grow to account for 11 per cent or more of Canada’s natural gas production within 10 years, he expects that only 33 trillion cubic feet of an estimated 500 to 715 tcf of natural gas in coal in place in Alberta will ever be developed.

A big challenge is that the coal formations in which the methane gas is found are highly variable in terms of how much gas and water they hold, Baker said.

Most development will occur in the Horseshoe Canyon formation, which is already producing more than 4.6 billion cubic feet of CBM and where up to 30,000 wells could be drilled within the next decade, he said.

The buried formation stretches from Edmonton to south of Calgary.

Unlike the Powder River formation in Wyoming or other coalbeds in Alberta, most of the Horseshoe Canyon coals contain very little water that must be pumped out and handled before companies can get at the gas.

Alberta Environment has shut down CBM test wells in other coal formations in the province because the wells encountered either huge volumes of salt-contaminated water or tapped into freshwater aquifers, Baker said.

Trident has invested $75 million since January 2002 in a 45-well pilot project to commercialize CBM production in the Mannville coal formation. It runs in a wide swath from Grande Prairie in the northwest to Lloydminster in the east and south to Calgary.

Mannville coal seams are saturated with ultra-corrosive saline water known locally as “witches’ brew,” Baker said. “We’ve seen pumps destroyed in three days. It is nasty stuff.”

Despite the many challenges ahead, Baker said he expects up to 1,200 CBM wells will be drilled this year in Western Canada – almost all of them by Trident, Apache Canada Ltd., MGV Energy Inc. or EnCana Corp.

(Mark Lowey can be reached at mark@businessedge.ca)