Unconventional Gas
Canada has large deposits of natural gas in rock formations that are especially difficult and expensive to produce. The gas in these difficult-to-produce formations is often referred to as “unconventional”. Most commonly, the formations are low permeability, or “tight” sandstones and limestones, coal seams, organic shales, or interbedded combinations of these formations.
Unconventional gas is found in virtually all Canadian sedimentary basins with the gas resource estimated at over 60 trillion cubic metres. Over the last several decades, new technologies have allowed it to be commercially developed. Between 20 to 30% of Canada's current natural gas production is unconventional. In the United States, unconventional gas accounts for over 40% of gas production.
Gas hydrates are another form of unconventional gas deposit. A gas hydrate is an ice-like crystalline solid formed from a mixture of water and natural gas. They occur in shallow sediments in colder northern regions, or in offshore sediments where temperature and pressure conditions allow them to exist. The gas resource contained in these hydrates is estimated to be larger than all other sources of natural gas combined, but is still years away from being commercially producible.
Unconventional gas will continue to grow in importance in North America, according to a 2003 National Petroleum Council study, and the National Energy Board's most recent energy reports highlight the emerging importance of Canada's unconventional, or “resource” gas plays. Some of the key technologies used to develop unconventional gas include:
- Advanced coring and reservoir characterization methods for resource assessment;
- Low cost drilling methods such as coiled tubing and “fit-for-purpose” conventional drilling rigs;
- Underbalanced drilling;
- Directional and horizontal drilling;
- Drilling multiple wells from single drilling sites;
- Drilling wells that allow simultaneous production from multiple, vertically-stacked reservoirs;
- Advanced well stimulation methods including hydraulic fracturing and multiple-zone treatment technology including coiled tubing completions and advanced packer technology in horizontal wells;
- Developing fit-for-purpose, low-cost gathering and compression systems;
- Achieving economies of scale by drilling large numbers of wells and developing the supporting infrastructure in multiple-well coordinated programs.
Shale Gas
Although organic, gas-bearing shales have been producing gas in North America for over 100 years, a true “shale” play has only recently been initiated in Canada. A number of shale plays have been developed in the United States, beginning with the eastern Devonian shales in the late 1800s and more recently the Antrim, Barnett, and Fayetteville shale plays in Michigan, Texas, and Arkansas, with the Barnett being the single largest natural gas play in the U.S. in 2007.
Organic-rich gas shales store gas in both free porosity, like normal formations, and in an adsorbed state, with the gas stored within the organic material in the shales. The gas potential of Canada's shales has been known for some time and is estimated at over 28 trillion cubic metres. It has only been in the last few years that companies have been pursuing shale plays.
In 2006 and 2007, horizontal drilling and completion technologies were deployed to significantly increase well performance and commerciality in the Montney shale play in Alberta and British Columbia. Over $900 million was spent at Crown land sales in 2007 in British Columbia on lands primarily targeting shale gas potential, including the Montney shale and the emerging Devonian Muskwa shale play in northeast British Columbia. In addition, shallower Colorado shales are being commercially developed in Alberta and shale plays are being evaluated in Nova Scotia and Quebec.
As more operators experiment with completion technology in shales, which occur in virtually all of Canada's sedimentary basins, more shale plays will likely emerge.
Tight Formation Gas
As in the United States, tight sandstones and limestones are Canada's most important unconventional gas resource in terms of production. A recent study, funded in part by the Canadian government, indicates that between 85 and 113 million cubic metres per day of Canada's gas production is from tight gas formations. Historically, it has not been the practice in Canada to distinguish between conventional and unconventional gas production from sandstones and limestones. Over the last decade or so, the contribution of tight zones to production has been increasingly recognized and targeted for development. Significant tight gas production occurs in shallow gas plays in Saskatchewan and Alberta, the deep basin of Alberta and British Columbia, as well as a new development in New Brunswick.
Advances in drilling and fracturing technology, higher gas prices, fiscal incentives and innovative co-mingling regulations have all led to increased tight gas development in Canada. One good example is the increase in Cadomin formation production in British Columbia, which occurred due to advances in horizontal drilling and fracturing methods. As conventional sandstones and limestones continue to decline in production, these tight formations will become increasingly important.
