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Horn River to Support 'High Drilling Levels' for Years

The Horn River Basin of British Columbia (BC) holds an "ultimate potential" of marketable unconventional natural gas shale of 78 Tcf, which "ranks among the most prospective shale gas basins in North America," according to a new government energy market assessment.

"Ultimate Potential for Unconventional Natural Gas in Northeastern British Columbia's Horn River Basin" was completed jointly by the BC Ministry of Energy and Mines (BCMEM) and the National Energy Board (NEB).

Discovered resources to date in the basin are 3 Tcf, which puts estimated undiscovered resources at 75 Tcf, the authors noted. Just three years ago Wood Mackenzie analysts had estimated that the Horn River Basin contained around 37 Tcf (see Daily GPI, May 13, 2008).

"The remaining resources can support high drilling levels for many years in the province," the latest report said. "Northeastern British Columbia now holds about 55% of the reported ultimate remaining conventional and unconventional natural gas resources in the Western Canada Sedimentary Basin."

The Horn River shale resources began to attract attention among U.S. producers in early 2008, when EOG Resources Inc. reported some gas discoveries on its leasehold (see Daily GPI, Feb. 29, 2008). More positive reports quickly followed in the next few months (see Daily GPI, May 2, 2008; April 24, 2008; April 23, 2008; April 8, 2008).

"Having regard for the inherent uncertainty in estimating geological prospects and predicting gas potential, the agencies estimate the ultimate GIP [gas in place] in the Horn River Basin to be 372 Tcf to 529 Tcf, with the expected outcome of 448 Tcf," the report said. "The marketable resource base is expected to be 61 Tcf to 96 Tcf, with the expected outcome of 78 Tcf..."

"Marketable" gas refers to "technically recoverable gas volumes under foreseeable market conditions."

The basin's "ultimate potential will very likely meet or exceed the low-case estimates," the authors said. "The medium case [78 Tcf] represents the most realistic outcome. The high case is possible, though unlikely to occur." The report excludes an area south of the basin because the land is currently "untenured, which would presumably restrict its development."

The report relied on input from experts at the Geological Survey of Canada, the U.S. Geological Survey and industry. Altogether 337 "unique" wells were used in the study.

The northeastern BC basin was last studied in 2006, but the report was based on year-end 2003 data, the authors noted. That eight-year-old data indicated additional gas potential but not enough to "confidently" estimate gas reserves.

"That data is now starting to become available and, in 2010, the BCMEM and the NEB determined that there was sufficient data to estimate the potential of the Horn River Basin shale gas play," said the authors, who launched the latest study in mid-2010 and continued into this year.

According to the researchers, the medium case estimate for "marketable" natural gas was determined to be 78 Tcf.

Data was drawn from several plays within the basin: the Evie Shale in the Lower Keg River Formation, the Otter Park Shale in the southeastern corner and the Muskwa Shale, which is on the western side and not restricted to the basin.

Several other unconventional gas plays in British Columbia and elsewhere in Canada could, if developed, "substantially increase the resources available for Canadian use and export purposes," said the report. The agencies intend to assess the other BC plays "as time, data and resources allow."

The report is available from BCMEM or the NEB.

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