Ultimate potential and supply of natural gas in Alberta

474 Pages·1992·24.8 MB·English

by  Alberta. Energy Resources Conservation Board

REPORT 92-A
Ultimate Potential and Supply of
Natural Gas in Alberta
National Library BIbllotheque nationale
of Canada du Canada
1^1
Ultimate Potential and Supply of
Natural Gas in Alberta
ENERGY RESOURCES CONSERVATION BOARD
ULTIMATE POTENTIAL AND SUPPLY OF NATURAL GAS IN ALBERTA
Report 92-A published June 1992
Published by:
Energy Resources Conservation Board
640 Fifth Avenue S.W.
Calgary, Alberta
T2P 304
Telephone: (403) 297-8311
Fax: [phone]
Cover Photo: Shell Waterton Gas Plant in the foothills of southwestern Alberta. Photo compliments
of Shell Canada Limited.
iii
TABLE OF CONTENTS
Chapter Page
1 EXECUTIVE SUMMARY 1-1
1.1 Background 1-2
1.2 Alberta's Natural Gas Resource Base 1-2
1.3 Economically Recoverable Reserves 1-3
1.4 Reserves Growth Forecast 1-3
1.5 Supply and Demand 1-4
1.6 Unconventional Gas 1-4-
1.7 Impact of Tedmology 1-5
1.8 Results and Conclusions 1-5
2 INTRODUCTION 2-1
2. 1 Concq)tual Basis of Ultimate Potential Estimation 2-1
2.2 History 2-2
2.3 Scope and Format of Ihis Rq)ort 2-3
2.4 Industry Input 2-4
2.5 Terminology and Abbreviations 2-4
2.6 Units of Measure 2-4
2.7 Effective Date of the Data 2-4
2.8 Reader Comments 2-5
3 ULTIMATE GAS IN PLACE 3-1
3.1 Introduction 3-1
3.2 Data 3-2
3.3 Stratigraphic Intervals 3-3
3.4 Play Areas 3-3
3.5 D^ermination of Average Gas In Place Per Section 3-5
3.6 Gas Resource Categories 3-8
3.7 Historical Drilling 3-9
3.7.1 Success Rate Data 3-9
3.7.2 Range of Successful Sections 3-12
3.8 Range of Gas In Place 3-13
3.9 Results 3-13
3.10 Discussion 3-16
3.11 Conclusions 3-17
4 ULTIMATE MARKETABLE GAS 4-1
iv
TABLE OF CONTENTS (cont'd)
Ch^ter Page
5 ECONOMICALLY RECOVERABLE RESERVES 5-1
5.1 Introduction 5-1
5.2 Database 5-2
5.2.1 Resource Data 5-2
5.2.1.1 Ultimate Potential 5-2
5.2.1.2 Gas Play Areas 5-3
5.2.1.3 OU Play Areas 5-3
5.2.1.4 Reservoir Recovery Factors 5-3
5.2.1.5 Surface Loss 5-4
5.2.1.6 Gas Composition 5-5
5.2.1.7 Co-product Yields 5-5
5.2.1.8 Success Rate 5-6
5.2.1.9 Exploratory versus Development Drilling 5-7
5.2.2 Exploration, Drilling and Production Costs 5-7
5.2.2.1 Land, Geological and Geophysical Costs 5-8
5.2.2.2 Drilling Depths 5-8
5.2.2.3 Drilling and Completion Costs 5-8
5.2.2.4 Drilling Density 5-9
5.2.2.5 Production Start-up Tune 5-12
5.2.2.6 Production Profile 5-12
5.2.2.7 Well Operating Costs 5-13
5.2.2.8 Processing, Gathering and Completion Costs 5-13
5.2.2.9 Flowline Costs 5-14
5.2.2.10 Abandonment Costs 5-15
5.2.3 Economic Assumptions 5-15
5.2.3.1 Cost of Equity Capital 5-15
5.2.3.2 Fiscal Regime 5-16
5.2.3.3 Inflation Rate 5-16
5.2.3.4 Price of Gas and Co-products 5-16
5.2.3.5 Gas Equivalent of Oil 5-16
5.3 Method of Analysis 5-16
5.3.1 Gas Price versus Gas in place 5-17
5.3.2 Gas and Oil in Each Section 5-18
5.3.2.1 Zones m Each Section 5-18
5.3.2.2 Deepest Well Depdi 5-19
5.3.2.3 Gas in Place per Section 5-19
5.3.2.4 Oil in Place per Section 5-19
5.3.2.5 Cost Allocation to Oil versus Gas 5-20
5.3.2.6 Gas Price Required for Adequate Rate of Return 5-20
V
TABLE OF CONTENTS (cont'd)
Ch^ter Page
5.3.2.7 Zones Deeper Than Existing Wells 5-20
5.3.2.8 Proven Reserves In Undrilled Formations 5-21
5.3.3 Gas Price versus Economically Recoverable Reserves 5-21
5.4 Results and Conclusions 5-21
5.4.1 Summary of Results 5-21
5.4.2 Conclusions 5-27
5.5 Critique of the Methodology 5-27
5.5.1 Stacked Zones 5-27
5.5.2 Costs Attributable to Oil 5-27
5.5.3 Resource Spread Throughout Play Area 5-28
5.5.4 Seismic Reduction of Drilling Density 5-28
5.5.5 Relatively High Costs Assumed 5-28
5.5.6 Drilling Density Greater Than One Well per Section 5-28
5.5.7 No Regard for Bitumen Drilling 5-28
5.5.8 Co-product Pricing 5-29
5.5.9 Full versus Half Cycle Economics 5-29
5.5.10 Low Productivity Wells 5-29
5.5.11 Overall ReliabUity of Results 5-29
6 RESERVES GROWTH FORECAST 6-1
6.1 Method of Analysis 6-1
6.2 Historical Reserve Additions 6-1
6.3 Reserve Additions per Section 6-2
6.4 Drilling Activity Forecast 6-2
6.5 Reserves Growth Forecast 6-4
7 SUPPLY AND DEMAND 7-1
7.1 Gas Demand 7-1
7.2 Gas Supply 7-2
7.2.1 Supply from Established Reserves 7-2
7.2.1.1 Major Pool Study 7-3
7.2.1.2 Cycling Pools 7-3
7.2.1.3 Southeastern Alberta Shallow Gas Pools 7-4
7.2.1.4 Solution Gas Pools 7-4
7.2.1.5 Injection Pools
7.2.1.6 Beyond Economic Reach Pools 7-5
7.2.1.7 Deferred Pools . 7-5
7.2.2 Supply from Future Reserves 7-5
7.2.3 Gas Supply versus Demand 7-6
vi
TABLE OF CONTENTS (cont'd)
Chapter Page
8 UNCONVENTIONAL GAS 8-1
8.1 Introduction 8-1
8.2 Tight Gas 8-1
8.3 Coalbed Methane 8-2
8.4 Reserves Potential 8-4
9 IMPACT OF TECHNOLOGY 9-1
9.1 Introduction 9-1
9.2 Evidence of Technological Change 9-1
9.3 Specific Tedinological Advancements 9-4
9.3.1 DrUl Bit Technology 9-4
9.3.2 Drillmg Mud 9-4
9.3.3 Horizontal Drilling 9-5
9.3.4 Seismic 9-5
9.4 Conclusions 9-6
10 CONCLUSIONS 10-1
Appendix '
r
A GENERAL BULLETIN GB 90-11 A-1
B ABBREVIATIONS AND TERMINOLOGY B-1
B.l Abbreviations B-1
B. 2 Terminology B-2
C INDUSTRY INPUT C-1
C. l Formal Submissions C-1
C.i.l Alberta Research Council C-1
C.1.2 NOVA Corporation of Alberta C-2
C. 1.2.1 Total Conventional Potential C-3
C.l. 2.2 Location of Reserves C-4
C. 1.2.3 Supply C-4
C. 1.2.4 Unconventional Reserves C-5
C.l. 3 TransCanada PipeLines Limited C-5
C.1.4 Western Gas Marketing Limited C-7
. C.2 Informal Input C-9
vii
TABLE OF CONTENTS (cont'd)
Appendix Page
D GEOLOGY OF STRATIGRAPHIC INTERVALS D-1
D.l Paskapoo and Edmonton Interval D-5
D.2 Belly River iDterval D-11
D.3 Chinook and Milk River Interval D-1 9
D.4 Medicine Hat Interval D-23
D.5 Cardium Interval D-27
D.6 Doe Creek Interval D-33
D.7 Dunvegan Interval D-37
D.8 Second White Specks Interval D-41
D.9 Base of Fish Scales Interval D-47
D.IO Viking Interval D-51
D.ll Basal Colorado Interval D-59
D.12 Mannville above Glauconitic Interval D-63
D.13 Glauconitic Interval D-69
D.14 Ostracod Interval D-75
D.15 EUerslie Interval D-81
D.16 Cadomin Interval D-87
D.17 Nikanassin Interval D-95
D.18 Rock Creek Interval D-101
D.19 Nordegg Interval . D-107
D.20 Baldonnel and CharUe Lake Interval D-113
D.21 Boundary Interval D-117
D.22 Halfway Interval D-121
D.23 Doig and Montney Interval D-125
D.24 Belloy, Kiskatinaw and Taylor Flat Interval D-131
D.25 Turner VaUey Interval D-1 37
D.26 Shunda Interval D-1 45
D.27 Pekisko Interval D-151
D.28 Banff/Bakken Interval D-157
D.29 Wabamun/Crossfield Interval D-1 65
D.30 Nisku, Blueridge and Camrose Interval D-173
D.31 Leduc and Grosmont Interval D-1 81
D.32 Swan Hills and Slave Point Interval D-191
D.33 Sulphur Point Interval D-1 99
D.34 Gilwood, Granite Wash, Keg River, Zama and Muskeg Interval D-203
E GEOLOGICAL DATA AND RESULTS E-1
F DRILLING COST DATA F-1
Vlll
TABLE OF CONTENTS (cont'd)
Appendix Page
G CASH FLOW ANALYSIS RESULTS G-1
H MISCELLANEOUS MAPS OF ALBERTA . H-1
H.l Figure 1 - Modified-PS AC Areas H-1
H.2 Figure 2 - Gas and Oil Areas H-1
H.3 Figure 3 - Number of Gas Zones H-1
H.4 Figure 4 — Number of Oil Zones H-1
H.5 Figure 5 — Deq)est Formation H-1
H.6 Figure 6 - Deq)est Well Dq)th H-2
H.7 Figure? - Undrilled Sections H-2
H.8 Figures - GIP per Section H-2
H.9 Figure 9 - OIP per Section H-2
H.IO Figure 10 - Gas Price H-2
I CUMULATIVE GAS IN PLACE VS INCREASING GAS PRICE I-l
J OJMULATIVE MARKETABLE GAS VS INCREASING GAS PRICE J-1
K HISTORICAL RESERVES GROWTH K-1
K.l Booked Reserves K-1
K.2 Discovery well K-2
K.3 All wells K-2
K.4 Exploratory wells K-2
K.5 Oldest wells K-2
K.6 DrUled Sections K-2
L DEMAND AND SUPPLY FORECASTS L-1