A decade of northern technology adaptation has evolved Alberta and British Columbia shale drilling into a match for rival gas-prone areas of the United States, producers told investment managers Thursday.
At a Calgary conference held by TD Securities, NuVista Energy president Jonathan Wright cited a stellar example. Hydraulic fracturing of a NuVista well drilled a total vertical and horizontal distance of 3.8 kilometers (2.3 miles) across the Alberta share in the Montney formation has yielded daily flows of 13 MMcf of natural gas and 560 barrels of light-oil condensate.
As in the United States, Canadian well lengths and frack injections have doubled over the past two years, resulting in productivity gains that pare down costs per mcf and barrel of combined production from liquids-rich shale gas deposits, added Wright.
Tourmaline Oil president Mike Rose told the full house of money managers, “We outperform almost all the U.S. on a full-cycle cost basis.” Northern deposits tackled by the advanced technology turned out to have a natural, geological advantage.
Thicker Alberta and BC drilling targets include “tight” layers that, while still requiring fracking, yield their contents more readily than denser shale, Rose said.
Since beginning operations in 2008, Tourmaline has swiftly risen to second place among gas producers, with current output averaging 1.2-1.3 Bcf/d, and is gaining on No. 1 Canadian Natural Resources, according to Tourmaline data.
Tourmaline investor presentations say its shale “netbacks” — prices received at wellheads after all expenses including transportation and taxes — are US$10.84 in Alberta and US$9.28 in BC per volume of gas and liquid byproducts equivalent to one barrel (six MMBtu of gas). The Calgary firm says the Canadian wellhead revenues compare well to U.S. favorites Marcellus, which it estimates to yield US$10.03, and Utica at US$9.46.
Kelt Exploration president David Wilson, a veteran of more than 25 years as a senior executive of Canadian production firms, said, “I’ve never drilled wells that pay out as quickly as they do today.”
Wilson called Montney wells as good as American rivals for investor attention in the legendary Permian Basin, if not better. He predicted an eventual return to Alberta and BC by international gas heavyweights that have sold assets or reduced Canadian field activity in order to concentrate on U.S. shale development.
Canadian shale drilling advances have lured Athabasca Oil Corp. into converting its former specialty, the oil sands, into a revenue base to pay for migrating over to liquids-rich gas development.
With a break-even price of US$40/bbl, bitumen production provides a reliable revenue source for quicker, less costly and more profitable shale projects, said Athabasca president Rob Broen.
The producers agreed that after ousting BC’s Liberal regime on June 29, left-leaning New Democratic Party on its way back into power for the first time in 17 years shows no signs of copying fracking bans imposed in Quebec, Nova Scotia and New Brunswick.
While the political right continues to emphasize the NDP’s legacy socialist tinge, Wilson said that for practical purposes industry fear of the party has moderated. “It’s not like these guys are new to the game [of separating campaign rhetoric from governing].”
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