The HUMMER of gas wells
New generation drilling techniques challenge convention
A shale gas well is to a conventional one as a Hummer is to a compact economy car. For the production companies, costs are six to 10 times higher. But unconventional well output is correspondingly greater.
For contractors with the right machinery and know-how to operate in the new field, unconventional wells represent a six- to 10-fold increase in “service intensity” or paid work. By Tristone’s count, shale gas development began in Canada in 2007 with 157 pioneering wells that required 15 drilling rigs. In 2008, an estimated 400 shale wells used 48 rigs.
In 2009, Tasdemir forecasts 800 shale gas wells will be drilled in Western Canada. Measured by the amount of contractor business and employment generated, he estimates that the Hummer-scale operations will be equivalent to 5,000 ordinary vertical wells drilled into conventional geological targets.
Much of the shale drilling remains concentrated in northeastern British Columbia, where the provincial government has enacted a natural gas counterpart to Alberta’s enticing oil sands royalty regime. But as the traditional source of four-fifths of Canadian gas output, Alberta is not blind to the new industry trend.
A handful of companies, such as Stealth Ventures and Unconventional Gas Resources Inc., have disclosed they are working on shale production trials in a variety of locations. Much of the activity is confidential, however. The secrecy follows a long-standing industry pattern of preventing early disclosures liable to cause expensive competition for new drilling targets at provincial mineral rights auctions.
Alberta cut royalties for deep drilling in 2008. The new unconventional gas activity has caught the eye of government earth science agencies that often provide the technical underpinnings of policy changes. The Alberta Geological Survey, an arm of the Energy Resources Conservation Board, planned to release a report this winter on the province’s shale gas resources. The Alberta Research Council has a partnership with the Schlumberger global oilfield services empire to develop shale gas production methods tailored for Alberta deposits.
The demanding unconventional operations are becoming widespread enough to affect traditional barometers of overall industry activity. Like the PSAC, the Canadian Association of Oilwell Drilling Contractors predicts the number of wells drilled in Western Canada will drop in 2009. But CAODC adds, “There has been a material adjustment to the days required to drill a well.” Since 2007, average drilling time has increased by more than 20 per cent to nine days per well from slightly less than seven and a half days.
Forecasts by the Canadian Association of Petroleum Producers show that while the industry is slowing, it is far from grinding to a halt. For 2009, CAPP forecasts spending of $43 billion on exploration and development. That is down by 14 per cent from $50 billion in 2007 and ’08. But the 2009 investment forecast is still much higher than totals of $29 billion in 2003 and $33 billion in ’04, before industry activity peaked over the past three years.
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