The next growth cycle in Canadian natural gas output will roll around without a return to the former industry pattern of big jumps in western well counts, according to a forecast by the National Energy Board (NEB).
New supply projections register effects of importing highly productive horizontal drilling and hydraulic fracturing methods from the United States into Canada’s mainstay producer provinces, Alberta and British Columbia (BC).
Canadian producers only hit their last, early-2000s peak of 17.5 Bcf/d by drilling up to 18,500 vertical wells a year into ever smaller, shallow deposits of naturally flowing gas, NEB records noted.
The Canadian average of initial, maximum output from new wells bottomed out at 560 Mcf/d in 2006, the year before northern adaptations of the U.S. production improvements entered commercial-scale use.
As unconventional drilling grew into the majority of Alberta and BC gas supply activity, the industry average initial well production rate has increased nearly four-fold to 2.15 MMcf/d, NEB reported.
The NEB’s reference case outlook of most likely trends projected a new Canadian production peak of 20.9 Bcf/d by 2040 to satisfy demand by thermal oilsands projects, liquefied natural gas (LNG) exports and gas-fired power stations.
However, unconventional production is expected to enable the industry to hold down the annual number of new wells to a range of 1,100-1,800 over the next 20 years, or no more than 10% of the total during the costly shallow-gas drilling era.
The NEB credited the “large jump” in Canadian industry productivity to “increased targeting of deeper resources with horizontal drilling and multi-stage hydraulic fracturing.”
The projected next 20 years of production growth would only begin to use up the added supplies made available by unconventional drilling methods, NEB said..
“From 2018 to 2040, total production will be 149 Tcf, just 12% of Canada’s 1,220 Tcf potential. For the reference case, Canadian resources are still projected to contain 1,071 Tcf at the end of 2040,” according to the board.
Industry activity is forecast to continue to concentrate on the most accessible and prolific geological formation opened up by unconventional methods, the liquids-rich Montney formation that straddles 130,000 square kilometers (50,190 square miles) of Alberta and BC.
Montney gas production has increased to 5.3 Bcf/d from zero in 2006, the NEB said. The conservative reference case forecast, anticipating only modest price increases at most, shows Montney output more than doubling to 12.1 Bcf/d by 2040.