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‘The whole game has changed,’ experts say as Canada’s oil and gas stockpile rises due to new techniques and ‘good work’
You wouldn’t know it by looking at gas prices at the pumps, but Canada’s oil and gas industry is in the midst of a technological revolution that is allowing access to previously unavailable petroleum deposits.
New drilling techniques, particularly the marriage of horizontal drilling and hydraulic fracturing of rock formations using high pressure water, have unlocked oil and natural gas from deposits that were uneconomic to tap even just a few years ago.
The result has been a dramatic decline in the price of natural gas in North America, a widening of the spread between oil prices in land-locked North America and the rest of the world, and expectations that there is much more oil and gas to be exploited on the continent.
The new technologies and discoveries of suddenly accessible “tight oil” and natural gas in shale deposits has U.S. politicians proclaiming that American energy independence is on the horizon and has pushed worries of Canadian energy depletion well into the future.
Canada, already assured of its energy superpower status for decades due to the enormous oil sands deposits, was not too long ago worried that it was fast running out of natural gas.
“We had pretty much burned a lot of it,” said Peter Howard, president and chief executive of the Calgary-based Canadian Energy Research Institute. “Now, with the advent of horizontal drilling and the inclusion of tight gas reserves and shale gas reservoirs into the national total, reserves have gone up significantly. So the whole game has changed.”
Although controversial in an environmental sense because of the use of millions of gallons of water mixed with some toxic chemicals, hydraulic fracturing (fracking) promises to open up unconventional natural gas reserves in northeastern British Columbia and Alberta, as well as Quebec and New Brunswick.
British Columbia has in recent years enjoyed a land rush on the part of producers looking to develop unconventional gas reserves in its Horn River Basin, Liard Basin, Cordova Embayment and Montney deposits and today accounts for about 20 per cent of the country’s total gas production, second only to Alberta.
With the North American natural gas market glutted and prices at decade lows (about $2 U.S. per million British thermal units), the province wants to ship gas through its proposed Pacific Trail pipeline to a dedicated liquefied natural gas (LNG) terminal in Kitimat, B.C., where it would be shipped for export to energy hungry Asian markets.
The Kitimat facility this week won export licence approval from the federal government – the second approval to ship gas from the area in six months – and could be up and running by late 2013 or 2014, which would then mark the first Canadian exports of LNG.
Canada’s Arctic also holds vast, untapped and still largely unknown energy resources in the form of oil and natural gas and development of the ecologically sensitive region will become easier in the future as global warming reduces ice cover and opens up sea lanes.
A 2008 U.S. Geological Survey assessment said the Arctic made up 13 per cent of the world’s undiscovered oil (90 billion barrels of undiscovered, technically recoverable oil), 30 per cent of the undiscovered natural gas (1,670 trillion cubic feet of technically recoverable natural gas), and 20 per cent of the undiscovered natural gas liquids (44 billion barrels of technically recoverable natural gas liquids) in the world.
“The Arctic is chockablock full of gas,” said Mike Dawson, president of the Canadian Society for Unconventional Resources (CSUR) in Calgary. Getting that energy to end markets, whether Asia, the lower 48 U.S. states or Europe, is another matter.
“It is really an infrastructure problem,” he said. “There are no pipelines and the challenge we have for the Mackenzie [Delta] and any other Arctic gas is this [fracking] revolution. This just pushes those projects farther and farther down the line.”
Also untapped and relatively unexplored to date is the seabed off Canada’s West Coast. While experts believe there are sizeable oil and gas deposits and the 30-year moratorium on oil and gas activity off the West Coast has just expired, there is currently no exploration planned.
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