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 85 trillion cubic metres. The Canadian Society for Unconventional Gas (CSUS) has estimated that the recoverable, marketable portion of this unconventional resource is from 10-27 trillion cubic metres.

Currently in 2010, unconventional gas accounts for about 25 per cent of the country's natural gas production and that contribution is expected to grow with continued decline of conventional natural gas production. Over the last several decades, new technologies have allowed it to be commercially developed.

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

Shale gas is natural gas that is embedded in shale, a sedimentary rock that was originally deposited as clay and silt. 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. 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.

The gas potential of Canada's shales has been known for some time and is estimated at over 30 trillion cubic metres. Normally, only 20 per cent of the gas can be recovered, but this could grow with advancements in drilling and fracturing technology.

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 $4 billion has been spent to date at Crown land sales in British Columbia on lands primarily targeting shale gas potential, including the Montney Formation, and Horn River Basin in northeast British Columbia and Alberta. 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. 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.

In Canada most of the tight gas potential lies within the Western Canada Sedimentary Basin, a large depo-centre of sedimentary rocks extending from Manitoba westwards to the Alberta - British Columbia border and northwards into Yukon and the Northwest Territories.

The recoverable, marketable portion of this unconventional resource is from 6-14 trillion cubic metres. For all tight gas reservoirs in B.C. and Alberta, marketable resources have been based upon low and high ultimate recovery factors (20 per cent and 40 per cent respectively).

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.

Unconventional Gas - Resource Center