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Alberta Orders Nearly 700 Natural Gas Wells Shut In
The Alberta Energy Resources Conservation Board (ERCB) announced Tuesday that it was ordering the shut-in of nearly 700 natural gas wells in the province because of the potential threat to future oilsands development.
According to the ERCB, the 691 wells to be shut in are operated by 25 companies, but two companies — Perpetual Energy Operating Corp. (formerly Paramount Energy Operating Corp.) and Canadian Natural Resources Ltd. (CNRL) — operate the most. The wells are located in the Liege Field of the Athabasca Oil Sands Area, approximately 100 kilometers (62 miles) northwest of Fort McMurray.
“We contested the contention that our gas was going to ultimately jeopardize the recovery of bitumen but other than potential technical solutions going forward, it’s really something that they’ve already ruled on so there’s no point in trying to reopen it,” Cam Sebastian, CFO for Perpetual, told the Calgary Herald. “There is certainly the potential that they’ll raise this issue in other areas, particularly the Peace River oilsands area. But the vast majority of our gas that could potentially be affected has already been dealt with.”
The ERCB said three energy companies investing in the oilsands — Sunshine Oilsands Ltd., Athabasca Oil Sands Corp. and Total E&P Canada Ltd. — had requested that the natural gas wells be shut in.
Since the early 1990s energy companies exploring for natural gas in the Athabasca region of Alberta have clashed with the ERCB and its predecessor, the Energy and Utilities Board (EUB), over the protection of the province’s oilsands. Regulators argue that gas extraction causes a drop in pressure that may impact bitumen recovery operations.
In 2005 the EUB issued a landmark ruling over the dispute and ordered the shut in of 917 natural gas wells with the potential to produce 120 MMcf/d (see Daily GPI, Nov. 14, 2005). The ruling followed a decision by the province to compensate gas producers forced to shut in their wells to conserve bitumen (see Daily GPI, Oct. 15, 2004).
More recently, the EUB in 2007 ordered Encana and CNRL to shut in 121 natural gas wells south of Fort McMurray in the Cold Lake Oil Sands Area Clearwater Formation (see Daily GPI, July 26, 2007). Two years later the ERCB ordered Encana, CNRL and Paramount to shut in 158 wells producing 33 MMcf/d (see Daily GPI, Oct. 19, 2009).
Oilsands deposits were once deemed beyond the reach of development due to the expense of recovery and poor commodity prices. Against this backdrop, the provincial government sold separate rights to natural gas in the Athabasca region in the 1980s. But a market for bitumen emerged as a result of technological advances and higher prices.
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