The persistently sharp contrast between expensive oil and cheap gas has had dramatic effects on Western Canadian drilling, boosting activity and accelerating a trend to targeting oil rather than gas.
A new 2011 forecast by the 250-company Petroleum Services Association of Canada (PSAC) raises activity projections to 12,750 wells, up by 500, or 4%, from expectations last fall and a 50% improvement on the group’s gloomy predictions during the 2008-2009 economic slump.
Current field work is continuing a trend that emerged in the 2009-2010 Canadian drilling season, when oil replaced gas as the target of more than half of the industry’s active rigs for the first time in memory. As of the first days of February about two-thirds of 633 rigs drilling were dedicated to oil targets, up from 52% in the second month of 2010.
The activity pattern continues to be one of a Canadian industry adapting horizontal drilling and hydraulic fracturing (fracking) technology for use on tight oil targets. Even in areas near the two main Alberta cities of Calgary and Edmonton, potent frack fluids such as hydrochloric acid and propane are coming into increasing use. With critical environmental attention riveted on the oilsands, the new drilling techniques have attracted little public notice or protest, except in Quebec, where drillers want to test the Utica Shale.
Industry participants such as Penn West Energy, a leader in the new methods, say Canada is especially suitable for the conversion due to a long history of resource conservation and environmental regulation that required wide spacing between vertical oil wells by limiting the number that could be drilled into geological reservoirs.
Alberta’s Energy Resources Conservation Board, observing that horizontal drilling enables multiple bores to be drilled across geological reservoirs without increasing land surface disturbance, is reducing well spacing requirements. The horizontal wells routinely run for a mile or more, and tree root-like patterns of flow channels opened up by a dozen or more high-pressure frack injections yield initial production of 600 b/d or more.
From a small experimental sideshow only two years ago, long-reach horizontal drilling with multiple frack injections into dense oil-bearing rock is rapidly becoming the growth star of Canadian industry operations. PSAC President Mark Salkeld predicts that the number of horizontal wells drilled in western Canada this year will top 5,000. “We continue to see an escalation in not only the amount of horizontal wells being drilled, but also in the length of these wells.”
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