* Duvernay, Montney, Muskwa among major formations
* Oil majors are amassing lands to unlock reserves
* Technology, economics will determine what gets produced
By Jeffrey Jones
CALGARY, Alberta, Nov 6 (Reuters) – A new study has
identified immense oil and gas resources in Alberta’s emerging
shale prospects, suggesting a string of recent takeovers and
land buys will yield impressive production gains for some of the
world’s largest oil companies.
The province’s shale formations, including the Duvernay,
Montney and Muskwa, could ultimately contain 3,324 trillion
cubic feet of natural gas, 58.6 billion barrels of gas liquids
and 423.6 billion barrels of oil, according to the research,
conducted by the Alberta Energy Resources Conservation Board and
Alberta Geological Survey.
Such figures put the deposits in league with some of the
major U.S. shale plays that have s ignificantly s hifted the
co mplexion o f the energy industry from conventional operations
to horizontal drilling and hydraulic fracturing.
Alberta, though Canada’s largest oil and gas producer, has
been behind many other jurisdictions in identifying and tapping
many of its shale prospects, so development is still in early
stages.
“The numbers fall in line, more or less, with many of the
other shales, whether it’s Eagle Ford or Marcellus,” said Andrew
Beaton, one of the report’s authors, referring to the big Texas
and U.S. Northeast formations where production has surged.
The study’s data came in close to numbers reported by some
of the companies exploring on the lands, which cover very large
regions of Alberta, Beaton said.
It shows Alberta has huge potential even beyond its oil
sands, currently seen as the world’s third-largest crude deposit
with about 170 billion barrels of proven reserves and ultimate
potential of as much as 1.7 trillion barrels.
International energy companies are making large wagers on
the potential. T he Duvernay and Montney have been the targets of
a boom in energy deal-making, with companies such as Encana Corp
, Chevron Corp and Talisman Energy Inc
amassing land positions to unlock liquids-rich reserves.
Last month, Exxon Mobil Corp agreed to buy Celtic
Exploration for C$2.6 billion ($2.6 billion), raising its
reserves in both the Duvernay and Montney.
Talisman has drilled four wells in an initial six-well
program on its Duvernay lands, and so far has kept results close
to its vest.
One of the major draws is the valuable liquids content of
the gas, as dry gas markets remain weakened by a continental
glut, Talisman spokeswoman Phoebe Buckland said.
Indeed, the oversupply has built up due to the industry’s
success producing gas from shale plays using hydraulic
fracturing in the United States and Canada. Th e technology has
also attracted staunch opposition from numerous environmental
groups, which warn of groundwater contamination. Th e industry
rejects asser tions that its fracking operations pollute water
supplies.
According to the ERCB/AGS study, the Duvernay, a formation
that cuts across much of north-central Alberta, contains 443
trillion cubic feet of total gas in place, 11.3 billion barrels
of natural gas liquids and 61.7 billion barrels of oil, at the
midpoint of the estimates.
The Muskwa, in Northwestern Alberta, has an estimated 419
trillion cubic feet of gas, 14.8 billion barrels of gas liquids
and 115.1 billion barrels of oil.
The Montney, in Western Alberta, is also a major exploration
area in neighboring British Columbia. On the Alberta side,
natural gas resources are estimated at 2,211 trillion cubic
feet, gas liquids at 28.9 billion barrels and oil at 136.3
billion barrels.
The authors cautioned that the numbers represent “endowment
of hydrocarbons” and that geological and engineering constraints
as well as economic, social and environmental considerations
will ultimately determine the volumes that will be recovered.
“The companies, can say, of course, whether they believe
it’s economic or not, but it’s still a learning stage in every
one of these formations,” said Dean Rokosh, lead author of the
study.
