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The Great Canadian Gas Race

Northern gas rush proves timely for power generators.
Fortnightly Magazine - May 1 2002

were in the shallower, more developed areas of Alberta and Saskatchewan. Then, last year, the company acquired Berkeley Petroleum, which had significant acreage in northeast British Columbia and the Northwest Territories where the risks of drilling a dry hole are greater but where there are significant rewards if a large gas field is found. "In these particular areas, the use of 3-D seismic is a real key component of that," Daniels says.

Technology such as 3-D seismic surveying allows companies to reduce their up-front financial risk by drilling fewer dry holes. In one of Anadarko's properties in British Columbia, the historic success rate for drilling using 2-D seismic data was about 10 or 11 percent. After the company started using 3-D seismic data for both structural interpretation and high-tech reservoir work, its success rate climbed to almost 50 percent.

"When you look at the capital dollars that you're investing, that takes a project that's marginally economic or uneconomic and makes it extremely economic," Daniels says. "You're drilling fewer dry holes. That's what 3-Ds do."

Anadarko says it will be exporting the fracturing technology it uses in the United States to help with extraction in certain Canadian formations where the reservoirs are tighter. Compared with higher permeable rocks, tight gas reservoirs often show a much weaker response to traditional fracturing treatments, resulting in low production rates and a high economic risk. Wells completed in tight reservoir rocks have to be stimulated by hydraulic fractures in order to achieve an economically adequate production rate.

The company has planned about 50 exploration wells for Canada in 2002, most of which will be gas. The company's $270 million overall capital budget for Canada includes approximately $190 million for development and infrastructure projects that will increase production in northeast British Columbia and the deep basin of northern Alberta. Approximately 382 development wells are planned, primarily in the heavy oil area of northeast Alberta and the shallow gas fields of southwest Saskatchewan.

The E&P sector expects to continue to find opportunities in both the United States and Canada, although certain areas will continue to become less productive. Anadarko is banking on Canada because of the positive returns it has seen from its exploratory well drilling.

"I think what we've done is we've accessed more resource that was not identified as an economic resource years ago," Daniels says." If you look at things like the tight sands, coalbed methane, they weren't even recognized 10 or 15 years ago as being a potential source of natural gas and, all of sudden, here we are looking all over the western United States and up into western Canada for those types of things and very successfully."

As the industry tries to meet the rising demand for natural gas, Daniels says there will be other areas that will be more economic to recover.

"I think that's been the history of the oil and gas industry," he explains. "I anticipate that in the future we'll be doing the same things. Some of the stuff that you're seeing with things like gas hydrates research, it's