An overriding theme for the Canada Region always has been its close ties with the United States, especially in regards to providing a secure, stable supply of energy to them from a friendly neighbor to the north, Region president David Dolph said.
This relationship is becoming increasingly important in today’s volatile political and uncertain financial arenas – but it is being tempered by increasing environmental constraints, both within Canada and the United States, largely focused on Canada’s oil sands developments, he added.
Dolph, who talked with several CR delegates as well as various industry personnel across Canada, sees the industry experiencing a gradual return to “normal” after the serious recession in 2009.
“There is a cautious optimism about recovery, but due to recent mergers and previous work force reductions there are a large number of geoscientists looking for work, with new graduates having a particularly tough time finding permanent positions,” he said. “This applies both in the western provinces as well as the East Coast of Canada.
“In regards to new graduates, this will have a negative effect in regards to lower enrollment in the next few years, but a positive opportunity for AAPG to become more involved in building student chapters and providing support for these students, who will see the value of developing close ties with the AAPG and other geoscientific associations,” he said.
As for the industry itself:
- Oil sands are seeing acceleration in project announcements.
- Alberta gas activity, such as conventional and coal bed methane, is depressed – as are gas prices.
- British Columbia shale gas projects continue to attract investments with royalty regimes being a big factor in attracting investments, with British Columbia and Saskatchewan leading the way.
Certainly, there are good signs to be found.
“(The industry is) overall generally promising with an outlook to improved fiscal terms in Alberta,” Dolph said. “Oil shale projects are showing a strong interest and there is some recovery in gas prices – but the recovery of prices may be slow at best.”
Exploration in the Western Canada Sedimentary Basin (WCSB) has had a strong focus on “resource plays,” he said, as companies look for lower risk exposure. Conventional exploration has suffered as a result.
“In eastern Canada onshore exploration is continuing with acquisition of 2-D and 3-D seismic data, with drilling expected in 2010,” he said. “There have been several company consolidations and farm-in activity has been active. Offshore exploration has improved slightly with the awards of several deepwater slope and shallow shelf licenses.”
What’s hot in Canada?
“Resource plays, both oil and gas, unconventional and/or low permeability plays,” Dolph said.
Add to that Northeast British Columbia tight shale gas plays, South Saskatchewan tight oil plays and “tight” oil plays, or zones of poor permeability, around existing conventionally developed oil fields.
“In eastern Canada, onshore shale and tight gas plays in Carboniferous basins, particularly the Moncton and Windsor/Kennetcook sub-basins” are hot, he added.
“Coalbed methane exploration activity has dropped off for the time being,” he said. “Offshore, shallow water, undrilled prospects surrounding producing fields in the Sable sub-basin have been the recent focus.”
Exploration “hot” zones to watch in the coming year is an example of Canada’s diversity.
“In the western provinces it will be more about development than true exploration in the mature basins,” Dolph said, adding that “identification and proving up new resource plays such as marginal reservoir quality rocks surrounding conventionally developed oil pools and characterizing producible resource ‘soft’ shales in east-central Alberta” also is on the list.
Expect conventional exploration offshore East Coast Canada, he said – in particular the untested Laurentian Subbasin.
The biggest challenges for Canada have a familiar ring for many parts of the world: Low gas prices and access to material resource.
But Dolph also sees unique challenges for his Region, such as finding jobs for new graduates in a time when companies remain cautious despite facing a deluge of imminent retirements.
“The recession helps to delay retirement of this expertise,” he said.
The Region’s business side of geology also suffers from:
- “Deskilling,” caused by repetitive, compliance-based resource play work.
- A lack of understanding of economic geology – that plays must be supply-cost and operating-cost competitive.
- Too much effort spent on uneconomic, non-material plays
A challenge unique to onshore eastern Canada is the availability of drilling rigs. For offshore, the challenges are:
- Real and imagined costs of drilling.
- Regulatory compliance.
- Limited prospectivity.
- Understanding the petroleum systems.
- Ending the George’s Bank moratorium.
- Aligning U.S. and Canadian regulatory policies on the North American eastern seaboard.
There are several developments that Dolph and others he spoke with anticipate in 2010, including:
- A new royalties and incentives package in Alberta, which will favorably increase E&P investment – particularly in gas developments.
- Concerns over the impact of fracing tight wells to shallow aquifers as drilling activities continue.
- Continued growth in new oil sands projects.
- Continued corporate mergers and acquisitions.
- Internationalization of Western Canada Sedimentary Basin (WCSB) expertise to resource plays globally.
- Potential non-renewal of the exploration moratorium of the Canadian side of the Georges Bank, which will initiate renewed exploration interest in the area. There has been no new data acquired in the area since 1984.
“What I’d like to see happen is more proactive communication by industry associations on the socio-economic benefits of E&P activity,” he said, “and the increase and stabilization of commodity prices.”