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Unconventional Gas Lifts BC Reserves to Historic Numbers

Tight natural gas and shale gas boosted British Columbia's (BC) reserves numbers to record levels from 2009 to 2010, and more gains are expected as development continues, according to the province's energy regulator.

The latest figures are included in the BC Oil and Gas Commission's "2010 Hydrocarbon and By-Product Reserves Report," which estimated that remaining gas reserves jumped 42% year/year to 33.1 Tcf from 23.4 Tcf.

"This represents the highest level of establishing remaining raw gas reserves and the largest yearly increase in the province's history, continuing a 10-year trend of increases," the commission said. The bulk of the gains resulted from unconventional gas development in the prolific Horn River Basin and Montney tight gas formation.

"British Columbia continues to be a world leader in exploration and development of unconventional gas reserves, and as our expertise and capacity to regulate natural gas activity for the benefit of British Columbians grows, so are the province's reserves," said Commissioner Paul Jeakins. "This is the highest level in the province's history...largely the result of exploration in the Horn River Basin leading to the discovery of more reserves."

Canada's National Energy Board last month said BC would eclipse Alberta as the top gas producing province because of its prolific unconventional deposits (see Shale Daily, Nov. 28). The hike in gas reserves also bodes well for the province's long-term energy strategy to attract investment and open up new markets for its natural resources through the "Canada Starts Here: The BC Jobs Plan," which includes developing up to three liquefied natural gas (LNG) export projects by 2020.

Several LNG export projects to take BC gas to Asia Pacific markets are in development. Calgary's Nexen Inc. last month agreed to sell a 40% stake in its massive BC gas leasehold to Japan's Inpex Corp., an LNG trailblazer (see Shale Daily, Nov. 30). Encana Corp., which also is a big BC leaseholder, is working with Apache Corp. and EOG Resources Inc. to optimize their growing Horn River output from Kitimat, BC (see Shale Daily, Oct. 6). A competing Kitimat export proposal, BC LNG Export Co-Operative LLC, also is working its way through regulatory approvals and lining up customers.

The latest estimates represent gas reserves that are recoverable using current technology. The results are based on production, geological and technical data, with valuations based on current and anticipated economic conditions. "For this reporting period, a review of activity in the Horn River Basin shale gas play has resulted in an increase in initial raw gas reserves of approximately 10 Tcf based on 40 Tcf of original gas in place and a 25% recovery factor," the commission said.

Six new gas-rich pools were designated for inclusion during the period: three in the Muskwa-Otter Park formation and three in the Evie formation. Some other notable revisions during 2010 included the Sierra Jean Marie, which saw an overall increase of initial reserves and Kobes Doig Phosphate Montney C.

At the end of last year a total of 98 shale gas wells were producing in the Horn River Basin; "many still held confidential under terms of experimental scheme approvals," the commission said. Output from the Horn River group of formations accounted for about 10% of total production in the province.

Meanwhile, the Montney tight gas trend continued to be the most active natural gas play in the province, with a total of 383 wells targeting the formation at the end of 2010. The trend accounted for 57% of all wells drilled last year. Development also extended the play to the northwest into the fields of Altares and Town.

"Montney production accounted for 26% of the total production within the province," said the report. "Reserve values have remained unchanged for 2010; however, an evaluation of overall reserves will be conducted for the 2011 report with expected significant upward revision."

BC's conventional gas production and reserve additions have been on the decline over the past decade and that continued from 2009 to 2010. Last year 134 wells were drilled for conventional targets. Notable revisions included the Burnt River Belcourt A, which saw an overall increase of initial reserves, and Groundbirch Doig A, also with an increase.

The province's oil reserves decreased year/year, however, with only 19 oil wells drilled in 2010. One new oil pool was discovered: Cache Creek Doig BB. According to the report, BC's oil reserves "continue to be dominated by secondary recovery schemes," with waterflood pools accounting for almost half of the remaining oil reserves.

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