Jrhana - two stories on British Columbia's Horn River shale gas field you might be interested in - this is in northern BC:
Exploration Push in British Columbia's Horn River Basin Produces Encouraging Results
By Russell Gold
10 July, 2009
The Wall Street Journal
Exxon is most encouraged by the exploration of 250,000 acres it has leased in the Horn River Basin, in northern British Columbia. Mr. Cejka said results from the first four wells lead the company to conclude that each well will produce between 16 million and 18 million cubic feet of gas a day.
That's five times the size of average wells in Texas's Barnett shale and comparable to big wells in Louisiana's Haynesville shale, two major shale-gas fields that already have moved the U.S. natural-gas market from scarcity to abundance.
Though Exxon is better known as the nation's largest oil company, "We are really interested in shale gas," Mr. Cejka said, detailing the company's push into the energy-exploration business, which was once dominated by scrappy independent companies.
Given that the world is awash with natural gas already, the addition of still more gas from shale fields in Canada and Europe could further depress prices, especially as industrial demand continues to stagnate amid the global economic downturn. But Exxon is taking a longer view.
"The industry is going to have to bring on oil, gas, coal, nuclear, hydro, wind and solar to meet the world's energy demand," Mr. Cejka said. "The economies of the world will come back. Demand will grow again. We are going to be there for the next 20, 30, 40, 50 years."
Other energy companies also are excited about the Horn River field. "This may be the best shale play in North America," said Michael Graham, an executive vice president at EnCana Corp., a Calgary company that already has a big Horn River presence. Mr. Graham said EnCana's latest wells are approaching Exxon's in terms of initial production.
Exxon's Mr. Cejka said that his company also has pieced together substantial leases in prospective shale-gas formations in Germany, Hungary and Poland, and is still adding acreage. Tests on two wells in Hungary, where Exxon and partners hold 400,000 acres, are expected this year. It will be the first time the shale there has been tested.
"Depending on how that goes, we'll either be patting ourselves on the back or walking away," Mr. Cejka said.
The company also plans 10 wells on 750,000 acres it holds in northern German's Lower Saxony Basin this year to better study the geology.
Exxon is interested in all these projects because the amount of gas trapped in shales is enormous. The company estimates there are one quadrillion cubic feet of shale gas world-wide, equal to about a decade's worth of global natural-gas demand, though not all of that is currently recoverable.
Shale gas is one of the "unconventional" gases that are trapped in dense rocks, rather than in porous rocks that form underground reservoirs. To reach it, energy companies must crack the rocks open by injecting them with high-pressure liquids. Improvements over the past few years in the technology to fracture dense rocks and drill vertical wells that turn and run horizontally underground have made it possible to develop unconventional gas.
Before the emergence of the Barnett and other shales, the industry expected the U.S. to become a big net importer of gas by 2009. Instead, the U.S. faces a glut that has driven natural-gas prices below $3.50 per million British thermal units, down 39% this year, and kept imports of liquefied natural gas at anemic levels.
Earlier this decade, companies such as Devon Energy Corp. and Chesapeake Energy Corp., both based in Oklahoma City, were among the first to use the shale-gas extraction technique. Their success spawned a host of imitators and competition for acreage in Louisiana, Arkansas, Texas, Pennsylvania and elsewhere.
Rather than compete with these smaller exploration companies, Exxon began looking for shale formations that were outside the U.S., but near major energy markets. The strategy set it apart from its big globe-trotting competitors, which built up unconventional-gas reserves through acquisition. BP PLC, for instance, spent $3.65 billion on a pair of deals with Chesapeake. Royal Dutch Shell PLC spent $6 billion to acquire Canadian Duvernay Oil Corp. and its acreage in a prospective unconventional-gas formation.
So far, companies are drilling for shale gas only in North America and to a lesser extent in eastern Australia, said Rhodri Thomas, head of consulting firm Wood Mackenzie, in Edinburgh, Scotland.
"Where we've successfully developed these, the volume of the resource has changed the gas market dramatically," he said. "The question is: Where else could this happen?"
Exxon results hint at B.C. gas bonanza
DAVID EBNER
10 July, 2009
The Globe and Mail
VANCOUVER -- The first results from Exxon Mobil Corp.'s exploration of the large Horn River natural gas field in British Columbia suggest there could be even more gas in the area than previously predicted.
Exxon, the world's largest publicly traded energy company, arrived late to Horn River, staking a claim in the untested southern area of the region last year. Last month, the company and its majority-owned Canadian arm, Imperial Oil Ltd., spent more than $100-million to buy the rights for more land adjacent to its original holdings.
Yesterday, Exxon said tests of its first couple of wells drilled last winter flowed at about two million cubic feet a day. Company spokesman Patrick McGinn wouldn't characterize the result or say whether Exxon was happy with it.
“It was just a first look to see what might be below ground,†Mr. McGinn said.
Though the conservative Irving, Tex.-based company is mostly mum, the news is yet another positive sign for Horn River, which is believed to be the largest gas discovery in Canadian history.
Located north of the town of Fort Nelson in rugged and remote northeastern B.C., Horn River is a shale gas play, a type of gas reservoir that has been unlocked with new drilling technology. The most prolific such field is the Barnett in Texas.
In the past two years, a rush of gas from other shale gas fields has produced an unexpected surge in supply, which suggests North America has far more gas than the industry had thought.
For Horn River, years of work and billions of dollars will be required to develop the field, if it lives up to early promise.
Roads, pipelines and processing facilities all need to be built.
Also, the region is far from customers, so competition with other fields in Texas and Louisiana is intense.
Still, EnCana Corp., which discovered Horn River in 2003, has already said it could eventually exceed what the Barnett currently produces.
“We're at the early stages in Horn River,†EnCanaspokesman Alan Boras said. “It has tremendous potential. There's a lot of gas.â€
Exxon, especially, is expected to move slowly. The company's focus is profit and return on capital, not growth, said analyst William Lacey of FirstEnergy Capital Corp.
“It's another endorsement for the region,†Mr. Lacey said. “But Exxon is pretty conservative. I don't think they're going to rush out to develop.â€
The Exxon test wells were drilled vertically in to the earth and the well bore was punctured by a single perforation, a general test to see how much gas might flow from below ground.
Production wells at Horn River are initially drilled vertically and then kick horizontally. Along the horizontal leg, which usually extends more than a kilometre, the well bore is punctured eight or more times and the tight rock is fractured by pumping a high-pressure mix of water and sand into the gas field to get the commodity to flow.
Shale gas could mean the brutal swings in the price of natural gas, from manic highs to deep lows, might moderate in the next decade as ample supply is balanced against demand, with producers more able to turn taps on and off rather than just pushing new production to market regardless of the need for the commodity.
While early production results from shale are strong, there is a debate whether the resource can actually increase long-term North American supply. Instead, it might simply mitigate declines from aging conventional gas fields, whose output falls more than 20 per cent each year.
Current production from Horn River is small at about 100 million cubic feet of gas a day. That's roughly 2.5 per cent of what Barnett produces today and less than 1 per cent of total Canadian production.
Significant production from Horn River likely won't emerge until 2012 or 2013. |
