Extensive acreage has potential

Shale Plays Make BC Feel Cozy

American Association of Petroleum Geologists (AAPG)

It might be winter in Canada right now, but British Columbia couldn’t be hotter.

Recent drilling there has revealed two unconventional gas plays in the province with superstar appeal similar to the Haynesville and Marcellus shales in the United States.

The first play targets the Devonian Muskwa and Evie shale formations of the Horn River Basin, in British Columbia’s far northeast corner. It’s a remote and largely undeveloped area where natural gas leasing has taken off astronomically.

The second involves the Lower Triassic, siliciclastic Montney formation just to the south of the Muskwa play in the Fort St. John-Dawson Creek area. Production extends eastward across the border into Alberta.

Together these plays cover hundreds of square kilometers – most of it largely untapped for unconventional potential.

“We’ll probably be producing out of that area 40 years from now, because it’s such a huge area and these shales produce for years and years,” said Vic Levson, executive director of resource development and geoscience for the British Columbia Ministry of Energy, Mines and Petroleum Resources (EMPR).

Barnett Similarities

In many ways, the Canadian plays are similar to unconventional resource plays in the United States. They’re driven by advances in horizontal drilling and fracture stimulation techniques that have opened up low-perm formations for exploration.

Shale Gas Activity in the Horn River Basin
Shale Gas Activity in the Horn River Basin

The Horn River Muskwa shale resembles the North Texas Barnett Shale, according to Levson.

“It’s similar to the Barnett in many ways,” he said. “If you look at the thickness, quartz content, permeability and organic content, it’s pretty similar in those parameters.”

Gas content substantially favors the Muskwa, although it’s too early in the play to predict likely recovery percentages.

“In comparison between the Muskwa and Barnett, the gas content at the end of the day is higher in the Muskwa,” Levson said. “But recoverability is still up in the air.”

Companies working the area include Apache, Devon, EnCana, EOG Resources, Nexen and others.

In December an EOG executive said prospects in the Horn River Basin shales look “better than the Barnett” based on early drilling results.

The company has estimated its own recoverable gas resource in the play at six trillion cubic feet, and Devon Energy said it could have 5-8 Tcf.

We’re Talking Big

What could set the Muskwa, Evie and related plays apart is the size of the prospective area and the possibility of establishing a larger high-production core than in the Barnett.

The total play area extends to a carbonate bank edge on the southern and eastern margins and to the Bovie Fault to the west.

“We’ve done work in mapping it out, and it’s an extensive shale,” Levson said.

More drilling and testing will be needed to define the play, however. And unlike the Barnett, the Horn River play region is sparsely populated with little development, and lacks supporting infrastructure.

“In the core area of the basin there’s not a lot of roads – they’re putting roads in now,” Levson noted. “It’s quite remote.”

Upper Montney: Potential Shale Gas Play Areas - Defined by Free Gas, and Depth Cutoffs
Upper Montney: Potential Shale Gas Play Areas - Defined by Free Gas, and Depth Cutoffs

Also, additional gathering systems will have to be built for new production. Thanks to earlier drilling in other formations, primarily in carbonate reefs and banks, there are pipelines around the basin, he said.

With a combination of soggy, semi-bog conditions and little access structure, winter has become prime development time for the play.

“It’s very boggy, and of course it freezes solid in the winter, so there’s been more winter activity,” Levson said.

Just to the south, the Montney shows a different character with a different set of challenges for explorers. It can be sandy, silty or shaly, based on geographic location and position within the formation.

“It’s a siltstone that becomes more of a shale as you move west toward the mountains. Some people are calling it a hybrid play,” Levson said.

He termed it a combination of a shale play and a tight sands play, or more precisely, a “tight silt.”

“There’s been a lot of activity in that area for a long time, but not specifically in the Montney. People would drill through it,” Levson said.

“It’s probably a good five years ago that companies first started to take a hard look at the formation,” he added.

Despite promising potential, the play slumbered until horizontal drilling was applied. Now wells have tested up to 6.4 million cubic feet a day, with some wells showing high liquids production.

“Recently people have been putting horizontals into the Montney and that’s changed the whole picture,” Levson said. “It’s resulted in an order of magnitude increase in production.”

The play extends from the foothills and trends northwesterly, he noted. Leasing for the Montney has picked up in both British Columbia and Alberta.

“The Montney thickens and deepens substantially to the southwest – the western edge has a depth constraint,” Levson said. “On the east side, by contrast, it’s shallower.

“Companies have been primarily working in the southern part of the play, where the infrastructure is located,” he added.

Recent successes have drawn a long list of players to the area.

“You name it – just about everybody who can get in is working there,” Levson said.

Explorers in the play area also have eyed the Middle Triassic Doig formation, another silty-shaly prospect.

“One zone is quite phosphatic. They call it the ‘Doig Phosphate.’ So that’s another area of interest. When you actually look at the rocks, though, they’re not that much different,” Levson observed.

Potential and Concerns

An earlier study by the ministry’s EMPR group identified a number of potential shale gas formations in northeastern British Columbia:

  • Lower Cretaceous: Wilrich Moosebar, Buckinghorse.
  • Jurassic: Fernie Shale, Nordegg.
  • Upper Triassic: Pardonnet.
  • Middle Triassic: Doig Phosphate.
  • Lower Triassic: Montney.
  • Lower Carboniferous/Upper Devonian: Exshaw, Besa River, Muskwa, Fort Simpson.

Gas-in-place for Devonian shales was estimated at 500 Tcf, highlighting the appeal of the 1.28-million-hectare – about 3.16-million-acre – Horn River Basin. The full Montney-Doig play extent could be more than twice as large, over seven million acres or 2.8 million hectares.

Taken together, the Devonian and Triassic plays provide a huge area for drilling, which is still in the early stages. All resource and production estimates are likely to change as exploration and development continue.

Environmental considerations in the area include sourcing water for drilling and for anticipated high-flow fracturing needs.

“The supply of water is an issue,” Levson said. “Where’s the water going to come from? We’ve got a pretty good handle on that, but we’re still working on it.”

A likely solution to water supply is locating subsurface aquifers, although “they aren’t always where you need them,” he noted.

The remoteness of the plays brings less worry about potential disruption of inhabited areas. Also, shale-gas players already have developed a small-footprint drilling approach.

“Because you can drill so many wells from one pad, that (disruption) might be less than the drilling we have now in some areas,” Levson said.

Let’s Make a Deal

With so much interest in northeastern British Columbia, some government issued land rights have gone for more than $10,000 an acre.

“The land sales have been just phenomenal. This year in B.C. we are over $2.5 billion,” Levson said.

Lower natural gas prices and constrained capital might slow the pace of drilling in the province, but won’t stop it. Short-term fluctuations have a limited influence on play areas that will take decades to develop.

“So far, we haven’t seen much impact. These are longer-term prospects – a lot of the capital was already committed,” Levson noted.

“In relation to other areas, B.C. is still seen quite favorably as a place for the industry to invest its money,” he said.

Conceptually, the idea of gas-rich resource plays in northeastern British Columbia isn’t new.

With just the right combination of geological understanding, horizontal drilling advances, new completion techniques and industry interest, those plays are finally reaching full launch.

“It’s exciting, and it means a fair amount of work for us,” Levson said.

“It’s really neat to see these things take off,” he added, “because we’ve been encouraging them for years.”

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