Industry suppliers must adjust to lasting supply and lower prices
Natural gas production for use at Suncor Energy’s oil sands and refining operations.
Photo: Suncor Energy
Technical advances in natural gas extraction and new discoveries of deposits are poised to radically alter the fuel’s production, processing and delivery in North America. As explorers and developers adapt to vast new unconventional gas finds, those who supply to the producers, processors and pipelines also face changes in where and how they do business.
The challenges and opportunities arising from these changes for manufacturers and service providers were covered at the National Buyer/Seller Forum for Alberta energy producers and suppliers, held in Edmonton in March. Speaking to delegates at a forum seminar, Brad Hayes, president of Calgary-based Petrel Robertson Consulting Ltd., outlined recent transformations in the natural gas scene and their ramifications.
“The message is that the unconventional gas resource is huge and it’s in many different parts of the country,” he said.
The upshot is shortages and rising-price scenarios predicted just a few years ago won’t come to pass. North America has entered an era of abundant natural gas and lasting, lower gas prices. Another seminar speaker, Kevin Heffernan, vice-president of the Canadian Society for Unconventional Gas, urged manufacturers and service providers to adjust to these new market conditions.
Historically, the Western Canada Sedimentary Basin (WCSB), which covers portions of Alberta, Saskatchewan and northeastern BC, has held most—some 226 trillion cubic feet (tcf)—of Canada’s marketable natural gas reserves. These WCSB reserves are tied in to distribution networks and currently account for most of Canada’s 6.9 tcf of annual natural gas production. However, the last decade has seen increased focus on tapping tight, or low permeability gas sands in the Deep Basin of Western Alberta and the Montney area, straddling northwestern Alberta and northeastern BC. While existence of those tight-gas formations were known, the gas couldn’t be captured until special hydraulic fracturing technologies were applied to them a few years ago.
Shale gas, another source of unconventional gas, is prevalent in a current “hot” play, the Horn River Basin north of Fort St. John, BC.
All this may sound like good news; however, numerous shale gas discoveries have been made elsewhere in North America, and some of them, notably in Texas, already are producing. Shale gas resources are also confirmed in the eastern parts of the US and Canada. Fields include Utica (with 150 tcf in place) in southeast Quebec, Nova Scotia’s Horton Bluff (130 tcf) and large discoveries in the Marcellus shale formation centred in Pennsylvania.