Frontier Supplies Can't Replace Western Canadian Production
A blue-ribbon team of veteran Canadian experts on natural gas supplies has set out to correct a starry-eyed vision of frontier resources that it says has periodically distorted North American energy policies and needs to be cleared up.
The western provinces will remain the mainstay source of Canadian supplies because arctic and offshore regions have yet to show they harbor enough resources to become replacements, the Canadian Gas Potential Committee has concluded after a four-year review of all known drilling targets.
Committee Chairman Roland Priddle, retired chairman of the National Energy Board (NEB), described the new report as a reminder that "there is a limit to the total conventional natural gas across the country. While Canadians have long looked to the North and to Canada's offshore basins for large new supplies, our study indicates that Canada's frontiers will simply supplement the nation's core production from Western Canada."
Richard Procter, retired chief of the oil and gas arm of the Geological Survey of Canada, described the study's findings as calling for a major shift in emphasis by long-range energy planners. He acknowledged contributing to the misty-eyed view of frontier bonanzas himself, in work dating back decades.
Since the 1960s, visionary Canadian industry and government leaders have repeatedly projected vast geographical growth in gas activity, into both arctic and offshore frontiers. The vision repeatedly played a role in large-scale actions ranging from the creation of Panarctic Oils with 53% ownership by the federal government in the 1960s, through the 1980 NEB's reliance on frontier resources as Canada's energy-security "safety net," to recurring bouts of northern pipeline planning.
The gas potential committee calculated that of 233 Tcf of marketable gas that can be reliably projected to be available across the nation's land surface and territorial waters, 142 Tcf or 61% lie in the Western Canada Sedimentary Basin. Of the western total, 78% is forecast to lie in Alberta, 16% in British Columbia, 5% in Saskatchewan and 2% in southern regions of the Yukon and Northwest Territories.
The "near frontiers" where there has been enough exploration to generate reasonable estimates and development prospects -- chiefly the Mackenzie Delta and offshore of Nova Scotia -- are estimated to hold 35 Tcf or 15% of Canada's marketable gas. The resources on the relatively accessible frontiers are estimated to include 24 Tcf in the Delta and Mackenzie Valley region and 11 Tcf offshore of Nova Scotia. Farther north, the Beaufort Sea and the High Arctic -- both somewhat explored in the 1960s and `70s, although with oil rather than gas as the chief target -- are projected to have 37 Tcf of marketable gas. The Grand Banks of Newfoundland and a handful of known drilling plays offshore of Labrador are projected to hold 17 Tcf.
Parting company with long-standing custom, the committee refused even to guess how much gas there might be in remote areas including most of the Arctic Islands, the Hudson's Bay region most of the ice-choked waters offshore of Labrador, the Gulf of St. Lawrence, and the Queen Charlotte Islands region offshore of northern B.C.
Procter observed that historical forecasts of astronomical resources for the distant frontiers continue to be recited but are "woefully out of date" after sporadic adventurous drilling campaigns over the past two decades that had results which should lower the old expectations. Procter added that there are still plenty of opportunities for big surprises, such as drilling just now beginning to get under way by the Marathon and PanCanadian organizations in deep water off Nova Scotia at locations potentially within reach of the Sable Offshore Energy Project's shallow-depth production facilities.
The committee also shelved a previous projection that 251 Tcf of coalbed methane would become available in Canada using known technology. The group said the big number was set aside because field work since it was generated in the 1990s showed that Canadian coalbeds are "considerably diffferent" from U.S. seams. American success with coalbed methane cannot be projected north of the border because Canadian deposits lack the same "permeability" or structure allowing gas to flow. The principal author of the committee's study, veteran industry geologist Robert Meneley, said the results highlighted the tall order that producers have to face up to in order to keep up with rising demand for gas across Canada and especially in the United States. With the biggest initial discoveries achieved decades ago, the resource endowment is increasingly scattered in smaller, ever harder-to-find drilling targets.
There are still rich prizes in western Canada. The committee calculated that 19% (27 Tcf) of the West's undiscovered gas potential is in 153 pools or drilling targets of 40 Bcf to 1 Tcf each. But another 26% (18 Tcf) is spread across 3,200 pools of 2.5-40 Bcf, while 54% (78 Tcf) is dispersed in 200,000 pools of less than 2.5 Bcf.
At current drilling success rates, the committee predicted that fully tapping the West's remaining gas potential will require up to 200,000 exploration wells -- twice the total drilled so far in the industry's history.
The group, a volunteer agency, included about 40 elder statesmen of the Canadian earth-sciences, engineering and regulatory community. Supporters included the Canadian Energy Pipeline Association and the Alberta Energy and Utilities Board.
TransCanada PipeLines stepped forward to take the first copy of the full study, which is priced at C$15,000 (US$10,000). The full report includes a 600-page summary in hard-copy form plus a myriad of digital files. The committee boasts that the Canadian report probably represents the world's most complete report on an entire nation's natural-gas endowment.
It documents 184 geological "plays" or drilling targets in intimate detail made possible by Canada's pattern of Crown or public ownership of most resources, with companies required eventually as a condition of leases to disclose their discoveries fully in public records after limited periods of secrecy to protect exploration advantages.
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