The Alberta Research Council (ARC) and Schlumberger have begun a research initiative in unconventional gas resource recovery and technology development, specifically targeting future gas production from immature shales in northwest Canada.
The reason is simple: Canada is running out of finding natural gas, as the late actor John Houseman might say, in the old fashioned way.
“The future for Alberta’s gas production lies in unconventional gas resources,” said Ian Potter, vice president energy at ARC.
And that resource, most agree, is the immature shale reservoirs in northwestern Canada.
Alberta provides much of Canada’s natural gas, but little comes from shale or other unconventional reserves. And as the opportunities in conventional gas reservoirs decrease, these alternative arenas are becoming increasingly crucial to meet market demands.
Estimates vary as to how much shale gas is in the Western Canada Sedimentary Basin, but it is believed to be anywhere from 86 to 1,000 trillion cubic feet (Tcf). At the present time, there’s only five to six trillion cubic feet being extracted.
Immature shale reservoirs may pose the best opportunity for high yields, but they also provide substantial technical and financial challenges – which is why ARC formed the alliance with Schlumberger, through its TerraTek Geomechanics Laboratory Center of Excellence.
“Our expansion into the Alberta unconventional gas sector is strategic as we seek to develop new services to tap unconventional gas. This research collaboration will grow Alberta’s unconventional gas play and is a natural fit for Schlumberger,” said Derek Normore, president of Schlumberger Canada.
“Additionally,” he said, “Schlumberger will provide field and laboratory operations in Canada for core analysis related to unconventional gas recovery from shale and coal bed plays. This provides our clients with extended services related to the production optimization of unconventional gas.”
Blaine Hawkins, principal engineer and technical manager, Enhanced Gas and Oil Recovery for ARC, says the council works with both industry and government – regionally, nationally and internationally.
“We deliver innovative science and technology solutions to meet the priorities of industry and government in Alberta and beyond,” Hawkins said. “We do this by supporting the growth of innovative companies by extending an organization’s technical services and research and development capabilities.”
As for the shale project, there are some immediate obstacles: While the price of oil is up, the price of natural gas is not, which could be a potential problem in finding companies to invest the kind of money and resources on a long-term basis necessary to extract the natural gas.
Hawkins believes, even now, with natural gas prices around $7 mcf, it’s still doable. Ideally, though, he thinks the price of natural gas probably has to reach $10 mcf for it to make total economic sense.
When asked what will happen if the price doesn’t increase, Hawkins said he could imagine a scenario where the project is scaled back, but is convinced it will begin and move forward regardless.
The reality, though, even if prices stay low, is that Canada will have to look for natural gas in new and often more expensive places than before, and this project is recognition of that fact.
The initial research program will focus on improving gas production from immature shale reservoirs by applying advanced rock characterization and non-damaging fluids fracturing technology.
The potential is great, but so is the risk, which is why the ARC targets companies, then establishes and coordinates consortia that will share the risk and accompanying rewards.
“We provide a way to leverage the technological funds,” Hawkins said. “Lower their risk and give them the highest probability of success. Royalty-free technology. It gives them a leg up (on non-consortium companies).”
As for the specific project, Hawkins knows it will not be easy.
“Shale is tricky.”