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Related: Drilling And Completions Strategies Evolving In The Duvernay
Duvernay operators continue building their subsurface knowledge of the massive shale resource underlying much of central Alberta, with recent land sales and exploration drilling pushing the boundaries of the play into new areas, a recent Canadian Society for Unconventional Resources (CSUR) workshop in Calgary heard.
Companies on the hunt for oil are expanding activity northward of the Kaybob–Simonette development area of northwest Alberta, while also testing the limits of the oil window northeast of the Willesden Green area up against the Homeglen-Rimbey reef complex, said Bruce Hancock, senior exploration geologist for geoLOGIC systems ltd. and editor of geoXPLORER, an exploration-focused newsletter produced by geoLOGIC.
In the East Duvernay, operators have pieced together its complex geological puzzle and are now in the oil development mode, said Marc Houle, VP of exploration for Artis Exploration Ltd.
Exploration of the Duvernay began with sorting through a mountain of data, said Hancock, a former lead exploration geologist and VP exploration for Encana Corporation (now Ovintiv Inc.).
“To start evaluating a new play concept you have to gather all the available data possible, from DSTs, core, mud logs, gas analysis, pressure data, mineralogy and work from previous studies,” he said. “The Devonian production across the West Shale Basin can be used to understand the fluid system for the Duvernay since the Duvernay is the source rock that generated the hydrocarbons found in the Devonian reservoirs. If you plot all the Devonian production in the West and East Shale Basins, both oil and natural gas, with the idea that it could give an indication of potential fluid windows for the Duvernay, it matches the fluid API data from geoLOGIC’s Fluid Module almost perfectly.”
Two events helped confirm to industry that the Duvernay could be a major unconventional shale play in the West Shale Basin, said Hancock. The first was a well in the Pinto sub-basin that had recently been re-entered and deepened by Talisman Energy Inc. in July 2009, where the company cut a 39-metre core through the Duvernay section.
This well set off the first major Duvernay land sale in December 2009. Following the initial land sale, activity shifted north of the major reef complexes (Simonette, Bigstone and Windfall). Celtic Exploration Ltd. et al drilled the first horizontal well targeting the Duvernay condensate window and press released the well results, 2.1 mmcf/d of gas with 75 bbls/MM of condensate (56-degree API), providing a second affirmation that there was a condensate window for the Duvernay play.
“By the end of 2011 there was [a] significant amount of activity across the entire West Shale Basin and East Shale Basin targeting the Duvernay. Land sale activity in the East Duvernay area (Innisfail and Trochu sub-basins) took off from 2012 to 2017 after EOG Resources drilled an exploration well,” said Hancock. Vesta Energy ultimately acquired EOG’s acreage in the play surrounding Innisfail, while Artis Exploration built out its land position centred around Three Hills beginning in 2015.
“By the end of 2017 we were seeing tremendous amounts of production in the Simonette-Kaybob, Willesden Green, Innisfail and Trochu areas,” said Hancock, with exploration activity now shifting to the oil window. “We now see people pushing the oil window north of the Sturgeon Lake Reef such as Hitec and B-32; [Baytex Energy Corp.] and others developing the oil window along the Homeglen-Rimbey reef complex north of Willesden Green; [and] Teine Energy has built a great position in the middle of the West Shale Basin, between Kaybob and Willesden Green, where they are targeting the oil window and have been getting some great wells.”
The one surprise to date has been the extent of the oil window to the north, he added. “Companies continue to post and purchase lands towards the immature window and the question arises, ‘Is there a line of death where the kerogen doesn’t get converted in the immature window?’ As you go to the northeast it also gets thinner, so another question that needs to get answered is ‘How thin can you be and still get a high enough rate to be economic?’”
Development in the East Duvernay (Trochu sub-basin) is being driven by great economics, added Houle of Artis Exploration. Artis is currently producing around 7,600 boe/d consisting of 90 per cent liquids from its operations surrounding Three Hills. With approximately 400 sections of land in the play, Artis has plenty of running room.
“You would be hard-pressed to find a better netback,” Houle said of East Basin production. “We’re seeing netbacks of $70-$90 per boe. And one of the biggest things we have is scale. We have lots of locations.”
Houle, who previously worked for Athabasca Oil Corporation developing the oil window in the Kaybob area, said there are a lot of misconceptions about the quality of the rock in the East Duvernay.
“The East Duvernay is really different. Historically, there has been this stigma that it is full of carbonates and divided by a giant carbonate in the middle,” he said. What makes the play work is that the carbonates have conventional porosity and permeability as well. “It’s not a tombstone-type carbonate.”
Add to that rich organic matter with around 16-24 million bbls of oil per section as well as an elevated pressure system with pressures similar to Kaybob despite being at much shallower depth.
“So you have extremely rich organics inter-bedded with these carbonates creating what we call system permeability lift,” he said. “It’s one reason these ugly rocks work.”
Most of the drilling in the East Duvernay has targeted the upper zone, said Houle, but both the upper and lower zone beneath the carbonate are productive. “When we fracture the upper zone it gets through the carbonate and the same in reverse. They are not independent systems. There is oil top to bottom and we don’t favour one or the other.”
The East Duvernay has a number of other advantages that play into its strong netbacks, he added. It is in “an oil and gas friendly operating area,” noted Houle. The play is located on the prairies and not in the foothills, meaning less logistical challenges and costs related to remote operations. “We have Red Deer right beside us and Calgary is only an hour-and-a half away.”
As the Duvernay has developed, activity has shifted from region to region, said Alex Renaud, geoLOGIC’s senior engineering advisor. While there was a flurry of activity early on in the Willesden Green area of the West Duvernay Shale Basin and more recently steady activity in the East Duvernay, most licensing, drilling and production has been in the greater Kaybob-Simonette area.
“When we look at historical activity in the Greater Kaybob area it is pretty clear people have been chasing gas,” Renaud said, adding that chasing the oil window is a more recent trend. “In the South Duvernay the trend has gone from gas to oil wells and in the East it has been nothing but oil.”
Greater Kaybob area production totalled around 98,000 boe/d at the end of the first quarter of 2022, including around 540 mmcf/d of natural gas. A little over 900 wells have been drilled in the play, with 845 wells currently active.
In the south region of the West Duvernay shale 122 total wells have been drilled, with 104 remaining active. Around 2,800 bbls/d of oil was being produced at the end of the first quarter. In the East Duvernay there are currently 214 active wells, with production of around 12,000 bbls/d of oil at the end of Q1. Production in both areas is currently much higher as new wells have been brought onstream.
Given current commodity prices Renaud said he expects operators to continue chasing oil across the Duvernay. With gas prices increasing, however, he said there could be a shift in activity with some operators.
“Looking at gas prices trending in the $7-$8 per mmBtu range there is opportunity to start looking at the gas window,” he said. “We think the economics could be really good there. Operators may take another look at gas.”