A quest to revive growth in Canadian natural gas supplies by tapping the nation’s vast coal seams has spread to the Atlantic region, where a Calgary-based specialist reports initial technical success with methane drilling.

In two western Nova Scotia coal fields alone, a report done by geological and engineering consultants Sproule & Associates for the specialist, Stealth Ventures, estimates 1.6 Tcf of coalbed methane (CBM) await development.

Stealth, a “junior” or relatively new entry into the Canadian industry still in early exploration stages of corporate evolution, holds 198,366 acres (310 square miles) of coal gas production leases in well known, traditional mining basins called Stellarton and Cumberland.

The company reported that its first Cumberland well achieved its technical objective by proving current drilling methods are good enough to establish what amounts to a horizontal gas mine shaft across a wide coal face.

After drilling vertically to a depth of 1,133 meters (3,700 feet), a lined shaft with slots for potential production was installed horizontally across 425 meters (1,400 feet) of a coal seam. Stealth’s next move will be to try to repeat and improve on the initial technical feat in the Stellarton coal basin.

The Sproule study was made available to wary investors who recognize that CBM development is still in its infancy in Canada and deals with different geological and other features than its older counterpart in the United States. The study emphasized that translating “in-place” gas deposits estimates into economic reserves and production is still no sure bet. “The principal risk facing the company is the producibility of the coals,” said the consulting house.

But Sproule, one of the oldest Canadian firms in its field and for decades operator of a CBM research effort that included the National Energy Board (NEB), pointed out that long efforts have quietly been poured into the field. Although Alberta is the chief target of CBM as well as conventional gas drilling, Atlantic region deposits have also long been part of the Canadian effort.

The work is often secretive, with companies keeping results close to their vests in order to prevent competition from bidding up costs of leases. In Nova Scotia, Algas Resources and Suncor Energy drilled 25 experimental CBM wells in the 1980s. A local firm, Amvest, drilled and tested eight wells between 1993 and 2005. But key information, such as results of particular tests, remains unavailable, Sproule noted.

Like producers and financial analysts, Canadian government experts are groping for production forecasts on the basis of highly incomplete information. Current official expectations by the NEB anticipate 900 MMcf/d of CBM production by 2007 or triple the 2005 average of 300 MMcf/d. The 2005 performance was 36% better than the 220 MMcf/d of Canadian CBM production that the NEB projected a year earlier, on the basis of the field’s notoriously scanty information.

The Canadian Gas Potential Committee, a blue-ribbon panel of the nation’s top experts in the field, will take a first stab at estimating CBM reserves in a forthcoming state-of-the-industry report. Studies done by Phasis Consulting for the committee and Natural Resources Canada suggest that big increases are in the works for estimates of the amount of the vast coal gas endowment that will be made available to markets as economic reserves by improving industry technology and geological knowledge.

The standard estimate of gas “in place” or the resource endowment, 500 Tcf, remains in effect, a specialty conference in Calgary was told. But official estimates of economic, recoverable Alberta CBM reserves are poised to rise to 50-85 Tcf (26% to 39% of an estimated 218 Tcf endowment) in the shallow, dry Horseshoe Canyon geological formation tapped for almost all current production. In the deeper, wetter but more prolific Mannville coal zone under development by a pioneer production project about 100 miles northwest of Edmonton at Fort Assiniboine, recoverable reserves are rated as likely to reach 50-90 Tcf (21% to 38% of an estimated 239 Tcf endowment).

Even the low end of the new estimates under review for the main coal zones’ combined recoverable gas — 107-175 Tcf — tops by a wide margin the current conventional reserves of 40 Tcf in Canada’s main producing province.

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