Western Canada’s natural gas production will continue to be the key to the country’s gas supply, while Canada’s frontier regions will supplement the volumes available from the Western Canada Sedimentary Basin, according to the authors of a comprehensive four-year study. However, future supplies will cost more to find and produce because the average size of new gas pools, mostly in western Canada, is shrinking.

The 570-page report, released Tuesday by the Canadian Gas Potential Committee (CGPC), found that frontier production from remote locations in Canada’s north and offshore will cost more to develop and operate than supplies from the Western Canada Sedimentary Basin. The Committee, an independent group of senior earth science professionals, completed its first study on Canada’s total gas reserves in 1997, and found this new report confirms what it predicted four years ago: future gas supplies will be found in smaller accumulations that require more drilling to discover.

“Our country has a depth of natural gas resources, but the results of our latest study remind all Canadians that there is a limit to the total conventional natural gas across the country,” said Roland Priddle, CGPC’s chairman. “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.”

As of year-end 1998, there was about 233 Tcf remaining of nominal marketable conventional gas resources in Canada — a 40-year supply based on the 1998 production rate of about 5.8 Tcf, according to the CGPC. However, the authors found that these resources will never be fully tapped because many gas pools are considered “marketable” in name only.

Although the study estimated the potential of Canada’s gas pools in established exploration plays, some gas pools will never be found, others won’t be economic, near pipelines or within reach of explorers, it said. For example, some of the potential gas pools are under cities, within national parks and in areas where drilling is off limits. The realistic potential for Canada’s undiscovered gas resources, therefore, is much less than the 233 Tcf identified in the study.

The study does not assess how much of Canada’s total gas endowment is economic and accessible to producers. Instead, it is a compilation of detailed information on pool sizes and reservoir parameters, offering data to permit users to conduct additional analyses of how much gas may be available for production from each of Canada’s sedimentary basins.

At the end of 1998, the western basin held an estimated 54 Tcf of reserves and another 88 Tcf of undiscovered nominal marketable gas — about 142 Tcf. According to CGPC, the western basin therefore represents about 61% of the remaining marketable gas in Canada.

“Excellent exploration targets remain to be found, mainly in the Rocky Mountain foothills and Devonia geological traps under the Canadian prairie, however, an increasing proportion of the gas supply will be drawn from small, short-lived Cretaceous pools,” said Robert A. Meneley, chief analyst and principal author.

The CGPC estimated that the 150 largest undiscovered pools are high impact exploration targets that range in size from 40 Bcf to 1 Tcf. “This attractive group of prospects contains about one quarter of the marketable gas potential in Western Canada,” said the study. “Another 25% of the potential is expected in 3,000 pools that range in size from 2.5 Bcf to 40 Bcf. An additional 40% of the nominal marketable gas is expected from 65,000 smaller pools.”

What will characterize the future gas supply generation will be “high levels of exploration, development and other capital expenditures…At current rates of discovery in Western Canada, as many as 200,000 exploration wells, twice as many as have already been drilled, may be required to tap the undiscovered conventional gas potential.”

About 15% of Canada’s total marketable gas is in the near frontiers of Canada, defined as offshore Nova Scotia, the Mackenzie Corridor and the Mackenzie Delta. “However, most of this potential will require billions of dollars in investment to develop and connect to markets.”

Coalbed methane (CBM) and other nonconventional gas sources also may provide important gas supplies for Canada, but they will require extensive research into production methods. The study noted, however, that active pilot production studies are “critical” before a reserve potential may be estimated. If the projects now in progress or those planned are successful, the authors said that commercial CBM production may be achieved in the next decade.

Gas hydrates also hold great potential for Canada’s gas market, said the study. These gas accumulations, which are trapped underground as an ice-like solid composed of gas and water, are known to exist onshore in the Arctic and under the oceans of all latitudes. However, field research into “unlocking” this resource is in its earliest stages and will require “considerable” effort and time to determine whether there is any future potential. Studies now under way in the Mackenzie Delta and offshore Japan will be “critical” first steps to understanding gas hydrates’ potential.

The CGPC report includes every known gas pool in Canada, and it said it used geological judgment and statistical methods to assess the undiscovered gas potential in all of Canada’s sedimentary basins, based on data to the end of 1998. The final assessment also underwent a peer review by industry and government officials.

The report is available for purchase form the CGPC, P.O. Box 20032, Bow Valley Square, Calgary, AB, Canada T2P 4H3, (403) 607-8904. More information is also available on the web site at www.canadiangaspotential.com.

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.