Paramount Energy Trust (PET) and other natural gas producers operating in the northeast of Alberta will have to shut in billions of cubic feet of the resource to ensure the production of billions of barrels of bitumen, an Alberta Energy and Utilities Board (EUB) ruling states.
Last week, the EUB upheld an earlier ruling to shut in more than 900 natural gas wells producing from the Wabiskaw-McMurray formation to protect future oilsands production. The ruling said the gas wells must be capped to preserve underground pressure that will be required for eventual production of 25.5-billion barrels of oilsands bitumen; 280 billion cubic feet of gas will be shut in.
The board said it estimated the amount of oil being saved by the ruling is equivalent to 500 times the energy of the gas being shut in. The regulatory body rejected requests made this past summer by PET and other area producers to find other ways to protect the bitumen and still produce the gas.
"Today's final decision regarding the gas over bitumen issue does not come as a surprise to us but it does bring some disappointment.”
Sue Riddell Rose, president and CEO of the trust, said in a press release last week.
"PET has been fully accountable on this issue ... to thoroughly understand the technical issues and risk to bitumen recovery as a result of continued gas production from PET's specific gas pools," she said. "After extensive study, PET concluded that the risk to future bitumen recovery from PET's gas production was minimal. It appears that the board does not agree and continues to be unmoved from their initial views."
In a statement referring to last week's decision, the EUB said "it believes that the production of certain natural gas in the Wabiskaw-McMurray, if allowed, would put bitumen recovery at risk."
The EUB went on to say it "has found that as this gas is produced, it poses an unacceptable risk to bitumen recovery using thermal techniques, such as steam-assisted gravity drainage (SAGD)," which allows producers to tap bitumen found in formations far beneath the surface, out of reach for traditional oilsands mining operations.
PET - one of the main gas producers in the region - said last week's decision had "minimal" affects on its operations further from the millions of cubic feet per day of gas production it was forced to plug following earlier board decisions.
The trust said it hasn't completely abandoned the fight, saying it will continue to focus on converting its shut-in gas assets back into producing assets. The news release stated that while it is receiving partial relief from monthly royalty reductions, "still owns the shut-in reserves and they would be much more valuable were they returned to production."
(John Ludwick can be reached at ludwick@businessedge.ca)
