The combination of horizontal drilling and hydraulic fracturing will make natural gas an abundant, low-cost item for generations to come, according to a Canadian architect of North American energy free trade.
“The presently assessed resource, Canadian and North American...is enormous, approximating some 4,000 Tcf,” said retired National Energy Board (NEB) Chairman Roland Priddle.
“There are large Canadian unconventional plays that are yet to be assessed,” he said in a report written to support a request for an extended a liquefied natural gas (LNG) export license valid until 2067 by the LNG Canada consortium led by Royal Dutch Shell plc with partners Kogas, Petrochina and Mitsubishi Corp.
“The experience of gas production from the discovered resources and the progress of geological and engineering science relating to unconventional gas is likely to result in a continuing increase in the size of assessed resources.”
Underestimating supply by wide margins has been a consistent pattern since long before fracturing and horizontal drilling launched LNG overseas export schemes, Priddle said, drawing on half a century of experience with the Canadian government and NEB.
The first NEB gas export license approval, granted in 1960 for pipeline deliveries to the United States, rated Canada’s gas reserves at only 30 Tcf. By year-end 2014 the country produced 250 Tcf and had on hand a formally recognized, market-ready inventory of 70 Tcf.
The 1960 decision predicted that Canadian producers would add 60 Tcf of formally accepted reserves. But the inventory of proven supplies grew by 126 Tcf, or more than double the official regulatory expectation, Priddle said.
He noted that the unconventional drilling techniques that led to the shale gale multiplied conservative forecasts of technically recoverable gas resources by the NEB and U.S. Energy Information Administration to astronomical levels: 879-1,560 Tcf in Canada, 2,431 Tcf in the United States and 600 Tcf in Mexico, for a North American total of 3,910-4,591 Tcf.
Priddle suggested that U.S. gas dealers, flush with shale supplies, have permanently turned the tables on the continental market by both cutting U.S. pipeline imports and increasing exports to central Canada.
Data projections collected from industry by NEB and the Canadian Association of Petroleum Producers (CAPP) point to a prolonged drop in net Canadian pipeline exports, from 5.5 Bcf/d in 2015 to 2.4 Bcf/d in 2025, 0.7 Bcf/d in 2035 and 0.2 Bcf/d after 2040, Priddle said.
“The great size and the proximity relative to major Canadian gas markets of U.S. gas resources suggests that, in areas distant from Western Canada Sedimentary Basin gas resources, [Canadian] exports will continue to face intense competition and imports to Canada are likely to thrive, resulting, in the long term, in minimal net Canadian gas pipeline exports.”
Any successes for Canadian production that eventually emerge from the lineup of 25 delayed LNG export schemes will likely be confined to the northern Pacific Coast of British Columbia, Priddle said.
U.S. supplies, led by the Marcellus-Utica shale structures, are so powerful on the Atlantic side of the continent that they are bound to fill any of the LNG terminals proposed on Canada’s east coast that succeed in launching exports to Europe, he said.
“The feed gas for projects in the Maritimes will almost certainly be drawn from U.S. sources,” he said. “This is because local onshore sources are under de facto moratoria [against fracturing], existing pipeline-connected offshore sources are expected to be exhausted by the 2020s and prices available for exported LNG are unlikely to be sufficient to justify commercial development of new offshore gas resources.”