We should be at $1.00 Producers Continue Working Southern Alberta Bakken/Exshaw Tight Oil Plays
By Richard Macedo
Horizontal drilling and hydraulic fracturing have opened up a plethora of tight oil plays in Western Canada, including the Exshaw/Bakken in southern Alberta, where producers are still trying to get a handle on the best way to drill the rocks in that area.
Several producers are currently active in the play including Bowood Energy Inc., Nexen Inc., Penn West Petroleum Ltd., Murphy Oil Company Ltd., Royal Dutch Shell, DeeThree Exploration Ltd. and Crescent Point Energy Corp. and Legacy Oil + Gas Inc.
In Southern Alberta this year, Murphy has plans for two appraisal wells, according to a company presentation. The initial objective there was the Exshaw/Bakken. Six appraisal wells were drilled in 2011 with mixed results. One recent well tested the Three Forks, and the company said early results were "promising."
"This is a play that we've put a lot of work into at Murphy," Jon Noad, exploration manager, Canada, with Murphy, told a recent Canadian Energy Research Institute oil conference. He was discussing some of the new tight oil plays in Western Canada, including the Exshaw. "There are several other companies out there drilling. There's probably been 25 wells drilled into this play in the last year at an individual cost of $7 million to $12 million a throw, so there's a decent amount of investment into this reservoir.
"There's a variety of sediments here which you're going to have to try and target with your horizontal well and your fractures to try and produce.
"The jury's still a little bit out about the best way to drill into these rocks," Noad added. "It's a complicated story to get right. A lot of these wells, the reason you'll find that they're non-commercial is not necessarily just to do with the geology, but to do with how they've been completed; what kind of pressure [has been] applied to try and break the rocks open, what they've used to hold them open and where they've targeted the wells."
Turning to other tight oil plays around the province, Noad said while they're described as new, in reality they are newly-accessed plays. Many of them have been known for generations.
"As the wells have been drilled in Western Canada, they've seen oil shows, but they've never been able to exploit them until the newer technologies of horizontal wells and fraccing," he told the conference.
Many of Western Canada's tight oil plays are still in the early stages of development, Noad said. In addition to the Alberta Exshaw, they include the Muskwa, Nordegg, the Horn River Group shales in the Northwest Territories and the Beaverhill Lake play.
"There's a huge concentration [of these plays] in Alberta," he said. "What's really driving Alberta's economy is plays like this.
"Once you think you've exhausted a certain way of producing oil and gas, then the technology comes along to reinvent the wheel and [you] go back in and find more ways of producing commercial hydrocarbons."
Meanwhile, Rusty Braziel, president of RBN Energy, LLC added that the rise of crude production in Canada and the United States could help the continent become energy independent in a short period of time.
"In other words, no Latin America crude, no Middle East crude, no Africa crude," he told the conference. "We could, if we choose to be so, be energy independent."
Is this possible before the end of this decade?
"The answer is not only yes but sooner still," Braziel said. "By 2014, the combined production of the U.S. and Canada will be to where it was in 1973, the 1973 peak of the two countries' production.
"What happens after that...we're into territory that we've never seen between the two countries before. We're into virgin territory in terms of how much crude production that we're seeing. Of course, we know that has a lot of implications for logistics and for capacity constraints.
"In terms of self-sufficiency, I define that as the point at which the combined waterborne crude imports of the U.S. and Canada go to zero. Or it's offset by a volumetrically equivalent export," Braziel added.
"We're going to assume that some of the coastal refineries are going to have to still continue to bring in bbls simply because of logistical constraints," he noted. "But...as long as there's equivalent exports, then we ought to be flush with that."