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

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

Among the cases examined, a B.C. gas pool called Midwinter JeanMarie C was successfully developed with 16 horizontal wells. It wasestimated that it would take 57 conventional, vertical wells toachieve the same results. The technology effectively achievesthree- to four-fold increases in reserves made available per well.In Canada, horizontal wells running at times more than 8,000 feetacross gas reservoirs also sharply increase productivity. In theMidwinter Jean Marie C, seven horizontal wells have accounted for83% of production while six vertical wells have yielded only 13%.While each horizontal producer costs more separately, the abilityto improve drilling results with fewer wells that the newtechnology makes possible is estimated to reduce overall productioncosts by at least 10%.

The technical group also points to other new developments led by”underbalanced” or “controlled-pressure” drilling. It improvesproductivity by replacing the use of heavy fluids to counternatural underground pressures with closed-loop systems that let gasflow while wells are being drilled, reducing damage to delicategeological formations and raising output. The new methods, whichalso include coiled tubing systems that work like dentists’ drills,are in increasing use to re-enter reserves rendered uneconomic byolder, cruder methods.

Besides strong gas prices, there are growing pressures acrosswestern Canada – known as “cultural” in the industry – to limit thevolume of wells whenever possible. This pressure front isespecially strong in Alberta, source of about four-fifths ofCanadian gas production. Formerly wide-open plains and foothillsof the Rocky Mountains are filling up with country-residentialdistricts, outdoor recreation operations, hobby ranches or farmsand touchy environmentalists. The trend is reflected in new,toughened energy development application guidelines enacted by theAlberta Energy and Utilities Board. The new rules center on “sour”gas laced with hydrogen-sulphide, which smells like rotten eggs inand can be lethal in concentrations of less than 1% of theatmosphere. About 30% of Alberta gas production is sour, and theproportion is expected to rise as drilling accelerates in deeperand foothills regions where geological reservoirs are highly proneto harbor the impurity. The toughened rules, which follow years ofmounting community pressure including high-profile feuds, do notprohibit sour gas development. But applications to tap reservesbelieved to be hazardous will be designated “non-routine,” triggerscrutiny in expanded detail, and set off “up-front” reviews ofdevelopment liable to follow drilling if it succeeds. Therequirements include expanded public consultation. Companies willobliged to lay out their plans in full and seek agreements withcommunities before they can put their cases before the AEUB.

The new system also includes a gas industry counterpart toMiranda warnings. Companies’ mandatory information packages for theAlberta public must include detailed explanations of the rights oflandowners and other parties affected by projects to protest themor seek changes before the AEUB, including instructions on how tocontact board personnel.

The Alberta board described the new rules as “the first step ina staged review of, and improvement to, the facility applicationprocess to balance stakeholder needs.” A provincial advisorycommittee on public safety and sour gas continues to review thedrilling, development and community relations scene. The EUB set atarget of mid-2001 for additional changes to its developmentapplication rules.

Gordon Jaremko, Calgary

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