The Western Canadian Sedimentary Basin is one of the largest, in area, in the world. Practically the size of all North American basins combined, it boasts the third largest reserves in the world, five major source rocks, numerous reservoirs, a broad range of structural and stratigraphic traps and a host of conventional and unconventional plays.
And unlike the United States, the non-restrictive laws and regulations of Canada give geologists full access to all well and production data and unlimited access to the best and most complete core repository in the world.
Located primarily in Alberta and extending into British Columbia, Saskatchewan, Manitoba and the Northwest Territory, the 1.4 million square kilometers, WCSB meets all the criteria of a super basin, a term coined by AAPG Members Bob Fryklund and Pete Stark of IHS Markit: it has produced more than 5 billion barrels of oil, with at least that same amount remaining; it has what some consider three world-class source rocks, the Exshaw, Nordegg and Duvernay, with stacked pay; it has extensive oil and gas infrastructure and an accessible service and supply sector.
However, if one requirement is lacking, it is “ready access” to markets.
For years, Canada has struggled with getting its product to the United States for refining, particularly the Gulf Coast refineries that can handle heavy oil and bitumen, the main products of the basin. The heart of the issue lies in pipelines, or lack thereof. It’s an issue, combined with the current downturn, that has crippled Canada’s oil and gas industry.
And while the Trump administration approved an extension of the Keystone XL pipeline that would allow Canada to export more product to the United States, some worry a Biden administration could reverse that action.
Yet many are hopeful about recent approvals for the Enbridge pipeline, which would connect Alberta’s rich oil sands to the U.S. Midwest’s refineries, and the expansion of Canada’s Trans Mountain Pipeline, which moves product to the British Columbia coast – conduits and capacity that might help revive the country’s industry.
Oil, Oil Everywhere …
The WCSB has an estimated 171 billion barrels of oil reserves and 632 trillion cubic feet of gas reserves, according to Paul Mackay, AAPG Member and president of Shale Petroleum Ltd., who spoke at the 2018 AAPG Global Super Basin Leadership Conference.
The WCSB produces roughly 3.4 million barrels of oil per day, the majority of which is sent to the United States to become diesel and gasoline, which are then sold to Europe and South America, Mackay said. The basin also produces about 15 billion cubic feet of gas.
Yet to use U.S. pipelines, Canada must offer its oil at a heavy discount, costing the Canadian economy $14 billion each year, Mackay explained. It is estimated that 18,000 jobs are lost for every 400,000 barrels of bitumen Canada exports, said Jon Noad, AAPG Member and president of SediMental Services.
“It’s frustrating knowing we have huge reserves and limited means of getting them to market,” said Robert Pinckston, AAPG Member and vice president of exploration at Altura Energy. “We are No. 3 in the world for reserves yet fall to No. 7 for productivity because of the lack of takeaway capacity. We are feeling that acutely.”
Pinckston and Noad are both scheduled to speak at the 2021 AAPG Global Super Basin Leadership Conference on Jan. 25.
At present, there are 17 refineries in Canada, and approximately 140 in the United States, Noad said, stressing Canada’s reliance on its southern neighbor.
Prior to COVID-19, which drastically reduced the demand for hydrocarbons, Canada was producing 1 million barrels of oil a day above capacity for its pipelines, Noad said. As a result, the country relied partially on rail to export its product – a mode of transportation that, unlike pipelines, produces greenhouse gases.
Even more startling, despite its substantial reserves, Canada is actually importing oil for its citizens. “We are selling our oil at a discount and buying light oil from Saudi Arabia instead,” Noad said. “Canada is importing 660,000 barrels of oil per day. Public data suggest that this cost the country $18.9 billion in 2019.”
Noad added, “You feel like shaking Canada by the collar and saying, ‘Come on, what are we doing here?’”
Prospective Plays
These days, just about everybody is after light, high quality oil, Pinckston said, adding that the Clearwater heavy oil play in Northern Alberta is considered the “hottest” play in Canada. It has been attractive because of its high permeability and porosity, making hydraulic fracturing unnecessary, and the oil quality is conducive for cold flow extraction.
“These key factors make it one of the most economically attractive oil targets in the basin,” he said.
The Cardium play, a tight sandstone play, also is attracting attention because of its light oil. It was the first of the large resource plays in the WCSB with 4,300 horizontal wells and 11,000 vertical wells.
In addition, the Charlie Lake and Viking are active, key resource plays because of their ability to produce light oil. The Viking sandstone has approximately 2,200 horizontal producing wells in Alberta and 8,100 horizontal producers in Saskatchewan. On a much smaller scale, Pinckston said the Charlie Lake play in northwestern Alberta is attractive because of its high initial rates of good quality oil at reasonable depths.
Despite the current downturn, Canada has continued to produce from its vast oil sands reservoirs, which are expected to become more prospective with higher oil prices. It is one of the largest deposits of crude on the planet. With an estimated 166 billion barrels of oil reserves, the oil sands, sourced by the Exshaw and Nordegg, it has been reported they contain enough oil to produce roughly 2.5 million barrels of oil a day for the foreseeable future.
“There is still running room in the oil sands, but there are challenges with environmental issues,” Noad said.
While roughly 20 percent of the sands are shallow and fairly easy to produce, the remaining 80 percent is at depth and requires technology such as steam-assisted gravity drainage, or “SAGD,” which increases the liquidity of bitumen and facilitates its extraction. Another technique in use is coal heavy oil production with sand, or “CHOPS.” The process involves heating subsurface sands so that both sand and heavy oil are produced simultaneously through “worm holes” made in the reservoir that serve as high permeability channels, Noad explained.
When Canada began using multi-staged, horizontal wells and hydraulic fracturing in its fine-grained formations, the technology opened up many unconventional plays in the WCSB, most notably the Montney. Known for its 300 meters of siltstone-dominated pay in some areas, the Montney is one of the most unusual plays in North America.
The Montney formation holds one of the largest unconventional gas resources in North America. It is estimated to contain a total of 448 trillion cubic feet of gas, according to Natural Resources Canada.
“There are a lot of subtle stratigraphic traps,” Pinckston said. While operators rely on 3-D seismic data to identify traps, sometimes they are too subtle to see. That is when geologists must sort through old well logs. “There are close to 700,000 well logs in the basement. It’s quite a database. You can put together as many plays as you want. For an explorationist like me, I’m the proverbial kid in the candy store.”
The Duvernay, also self-sourced, can produce 3.4 billion barrels of marketable crude oil, 76.6 trillion cubic feet of marketable gas and 6.3 billion barrels of marketable natural gas liquids, according to the Canada Energy Regulator.
Uncertain Future
The future of the oil and gas industry in Canada not only depends on additional pipelines but a government, and a world, that continues to support the industry.
“The industry is in trouble here,” Noad said. “So much depends on oil price and investors.”
There is talk of harnessing geothermal energy from wells, Noad said. While this remains relatively unproven in the WCSB, Canada has the technology, drilling equipment and fluids to bring such projects to fruition. A main obstacle is achieving the ideal temperature gradient.
“People are talking about how it could be a game changer,” he said.
If pipeline access expands and Canada can begin exporting more heavy oil, many will breathe a sigh of relief – at least for a little while.
“The market is not big enough locally and we are landlocked. We have a tremendous source of heavy crude and the refineries down south are perfect for that,” Pinckston said. “These are products that countries like Korea and Japan would love to have.”
Referring to Canada’s strong leftist stance on hydrocarbons and the United States slowly leaning that way, he worries that North America has lost sight that hydrocarbons will be needed for energy for decades to come. Where will this energy come from if oil and gas production continues to decline?
“Canada has ESGs (environmental, social and corporate governance) that are second to none in this world,” Pinckston said. “If they are going to strangle us and prevent us from producing, we will still need oil and gas. What many people don’t realize is that it will come from less environmentally-friendly countries. So, why not let us produce it ourselves?”