Some of North America’s brightest minds will gather in Calgary this month to help unlock the potential of one of Canada’s largest untapped hydrocarbon resources: Unconventional natural gas.
“Unconventional gas is hugely important because there’s so much of it out there, and in Canada we’re still in the early stages of development,” says Michael Gatens, president of MGV Energy Inc. and chairman of the Canadian Society for Unconventional Gas (CSUG), which is co-hosting the sixth annual Unconventional Gas Conference.
The conference, to be held at the Hyatt Regency from Nov. 17 to 19, will address reservoir properties of unconventional gas resources, economic and business challenges for natural gas from coal development, coal characteristics and reservoir stimulation techniques.
In addition to presentations, there will be panel discussions and producer updates on industry activities.
Gatens says the conference serves two important purposes: A chance for engineers, geoscientists and managers to exchange technical knowledge and opinions about technologies and techniques; and broader discussions about regulatory, environmental and community relations issues.
With average daily production of 18 billion cubic feet (bcf), unconventional gas – broken down into three main types, coalbed methane (CBM), low permeability reservoirs (tight sands and fractured shales) and hydrates – makes up roughly one-third of all United States natural gas production. Gas output from tight sands and fractured shales alone accounts for roughly 12 bcf per day.
In Canada, however, non-conventional gas is still trying to gain a foothold. CSUG believes that less than 10 per cent, or 1.5 bcf of the country’s total 17 bcf-per-day natural gas production, comes from unconventional sources.
The organization can only estimate the true number because, unlike their U.S. counterparts, Canadian regulators don’t require companies to differentiate between gas output from normal and tight sands, which likely makes up the largest component of unconventional production.
CBM, which is monitored, continues to grow, especially in Alberta. According to Alberta Energy & Utilities Board data, more than 2,450 CBM wells have been drilled, including 1,437 in 2004 to the end of September. By year’s end, total CBM production is expected to climb as high as 200 thousand cubic feet (mcf) per day.
Gatens predicts that in 2005, as many as 3,500 CBM wells will be drilled – which would dramatically increase daily output. Within the next two decades, production could exceed 3 bcf per day, he said, quoting National Energy Board estimates.
Hydrates perhaps hold the largest unconventional gas riches, although the true potential remains unknown. This resource can be found in permafrost and in deep ocean floors, where the methane becomes trapped in water or ice.
While the Canadian, U.S. and Japanese governments are conducting research on tapping hydrates, Gatens says research and development (R&D) is in the earliest stages and it could take 20 to 30 years to solve the puzzle.
R&D is one of the most pressing themes facing the unconventional gas sector, as are environmental and community relations. Sometimes, the issues collide.
“We’re dealing with unconventional resources, which is something new in Canada, and we think innovation technology, R&D, is a key element both in the exploitation and the harvesting, and also in the environmental-water-air protection areas,” Gatens says.
CBM, for example, has received a lot of bad press in Montana and Wyoming for causing environmental problems associated with high water production and its disposal. But Gatens believes media have blown the issue out of proportion. He says the industry takes environmental concerns seriously and makes every effort to address them.
“I think clearly there’s an increasing commitment on the part of industry, on the part of government and the part of the stakeholders to promote responsible development,” he says. “Those environmental aspects are a key leg of these processes, while in the past that leg wasn’t as equal as the pure production/extraction legs.”
(John Ludwick can be reached at ludwick@businessedge.ca)
