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Horizontal Wells Increasing Canadian Production

Horizontal Wells Increasing Canadian Production

New and improved drilling technology is turning out to be part of the answer to the emerging natural gas supply squeeze, at least in Canada. Horizontal wells, developed initially for oil, increase the accessibility, raise the productivity and cut the overall costs of tapping gas fields too, says a study by the National Energy Board, the Oil and Gas Commission of British Columbia and the B.C. Ministry of Energy.

A technical group came back with encouraging findings from a review of 248 horizontal wells drilled sideways across B.C. gas reservoirs that were difficult to tap because they lay in complex, faulted geological formations.

Among the cases examined, a B.C. gas pool called Midwinter Jean Marie C was successfully developed with 16 horizontal wells. It was estimated that it would take 57 conventional, vertical wells to achieve the same results. The technology effectively achieves three- to four-fold increases in reserves made available per well. In Canada, horizontal wells running at times more than 8,000 feet across gas reservoirs also sharply increase productivity. In the Midwinter Jean Marie C, seven horizontal wells have accounted for 83% of production while six vertical wells have yielded only 13%. While each horizontal producer costs more separately, the ability to improve drilling results with fewer wells that the new technology makes possible is estimated to reduce overall production costs by at least 10%.

The technical group also points to other new developments led by "underbalanced" or "controlled-pressure" drilling. It improves productivity by replacing the use of heavy fluids to counter natural underground pressures with closed-loop systems that let gas flow while wells are being drilled, reducing damage to delicate geological formations and raising output. The new methods, which also include coiled tubing systems that work like dentists' drills, are in increasing use to re-enter reserves rendered uneconomic by older, cruder methods.

Besides strong gas prices, there are growing pressures across western Canada - known as "cultural" in the industry - to limit the volume of wells whenever possible. This pressure front is especially strong in Alberta, source of about four-fifths of Canadian gas production. Formerly wide-open plains and foothills of the Rocky Mountains are filling up with country-residential districts, outdoor recreation operations, hobby ranches or farms and touchy environmentalists. The trend is reflected in new, toughened energy development application guidelines enacted by the Alberta Energy and Utilities Board. The new rules center on "sour" gas laced with hydrogen-sulphide, which smells like rotten eggs in and can be lethal in concentrations of less than 1% of the atmosphere. About 30% of Alberta gas production is sour, and the proportion is expected to rise as drilling accelerates in deeper and foothills regions where geological reservoirs are highly prone to harbor the impurity. The toughened rules, which follow years of mounting community pressure including high-profile feuds, do not prohibit sour gas development. But applications to tap reserves believed to be hazardous will be designated "non-routine," trigger scrutiny in expanded detail, and set off "up-front" reviews of development liable to follow drilling if it succeeds. The requirements include expanded public consultation. Companies will obliged to lay out their plans in full and seek agreements with communities before they can put their cases before the AEUB.

The new system also includes a gas industry counterpart to Miranda warnings. Companies' mandatory information packages for the Alberta public must include detailed explanations of the rights of landowners and other parties affected by projects to protest them or seek changes before the AEUB, including instructions on how to contact board personnel.

The Alberta board described the new rules as "the first step in a staged review of, and improvement to, the facility application process to balance stakeholder needs." A provincial advisory committee on public safety and sour gas continues to review the drilling, development and community relations scene. The EUB set a target of mid-2001 for additional changes to its development application rules.

Gordon Jaremko, Calgary

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