david rushmore

7/27/2019 David Rushmore

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J. David Rushford

Vice President, Chinook Business Unit

APEGGA Technical Luncheon

May 20, 2004

CBM in Alberta


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Tertiary

Tertiary-Cretaceous

Cretaceous

Cretaceous-Jurassic

TriassicPermian-Pennsylvanian

Pennsylvanian

Mississippian-Pennsylvanian

North American CBM Resource


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119

40

60

20

352

115

22

7

0 100 200 300 400 500 600

Tcf

British Columbia Foothills

Alberta Foothills

Alberta Plains

East Coast

Minimum

Gas-In-Place

Maximum

Gas-In-Place

Estimates vary widely- 146 Tcf to over 3,000 Tcf

2001 Canadian Gas Potential Committee

Canadian CBM Resource


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Clearwater River

Provincial Park

LacLaR ongeProvincialPark

M eadow Lake

ProvincialPark Narrow

Hills

Provincial

Park

Prince Albert

Nat ionalPark

Good Spi r i tLake

Prov. Park

DuckMtn.

Prov. Park

Moose

Mountain

Prov.

Park

Sask. Landing

Prov. Park

Buffal oPound

Pr ov .Par k

Athabasca

Lake

Lake

Claire

Mamawi

Lake

Cornwall

L

R

River

Lake

Wabasca

South

LakeW abasca

North

La keHeart

Bi che

LacLa

Lake

Beaverhill

Lake

Soundi ng

La keNewellLake

McGregor

LakePakowki

Res.

St.M ary

La ke

Sullivan

Lake

Buffal o

LakePi geon

LakeBuck

LakeGull

Lake

Sylva n

LakeGleniffer

Lak eFlat

Lak e

Winefred

LakeGarson

LakeGordon

LakeGregoire

La keCalling

Lake

McLelland

LakesGardiner

LakeN am ur

El l s

R iver

R

iv

er

R

i

v

e

r

River

R

LakeMargaret Lake

Wentzel

LakeHay

Lake

Bistcho

R

La keBison

Lake

Peer less

R

i

v

er

Rive

r

R i v

e

r

Ri v

er

Whitemu

d

P eace

LakeC ar di nal

Lake

Kimiwan

Lake

Utikuma

Lake

Snipe

L e s se r S l a ve L a k e

Little

Lake

ChipSte.Anne

La c

LakeW abamun

ReservoirBr azeau

LakeAbraham

River

Pembina

River

Red

Dee

r

Athabasca

R i v e r

Bra

z

e

a

u

Riv er

River

Oldman Oldman

Ri v

er

River

R

i

ver

Mi lkR i ver

Pea c

e

R

i ver

Richardson

Steen

River

Ri

v

er

R i v

e r

Ri

v

er

River

River

H

a

y

Hay

H a y

Yat

es

Buffalo

Salt

S l a

v e

River

OldFort

Ri

v

er

River

River

M

c Ivo r

Birch

Birch

R

i

v

e

r

Athabasca

A th a

b as c

a

N

or th

North

S

o

u

t

h

Firebag

R

Clea rwa t e

r

Riv er

Red

Deer

R

i v

er

Rosebud

R iv er

Ma cKay

C

h

ri

sti

n

a

W

i n e f r e

d

S

an

d

Smoky

S

m

o

k

y

R i v

e r

River

Ri v er

River

Ri

v

er

W ap it i

Notikewin

C hi nc hag

a

Wolve

rine

Riv

er

River

River

River

River

Ri ver

Beaver

Saskatchewan

Saskatchewan

Saskatchewan

Battle

Bow

B

ell

y

J a c k fis

h

Courtesy Oilweek

2003 Activity

2004 Activity

Industry Activity - CBM


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Unconventional gas resource

Oil sands of gas

Gas produced from coal seams

Large volumes of water initially produced

Low gas rates

Stage 1 Stage 2 Stage 3

Stage 3

(enlarged)

Sandstone

Coal

Limestone

What is Coal Bed Methane (CBM)


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Dewatering

Stage

Stable

Production

Stage

Decline

Stage

Time

Gas

WaterProductio

nRate

Typical CBM Well Production Profile


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One gram of kerogen has the surface area of a football field

1 gram

CBM Solut ons

What Makes CBM And Gas Shales Special


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Tight Gas

Sands

Tight Gas

Sands

Shale Coal

0%

28% Ash

4%

14% TOC 11%

4%

0.31 Bcf

0.84 Bcf 0.85 Bcf

1.3 Bcf

Area = 160 AcresThickness = 3 mTemp. = 38 oCPressure = 11 MPa

Tight Gas

Sands

Tight Gas

Sands

Shale Coal

0%

28% Ash

4%

14% TOC 11%

4%

0.31 Bcf

0.84 Bcf 0.85 Bcf

1.3 Bcf

Area = 160 AcresThickness = 3 mTemp. = 38 oCPressure = 11 MPa

(modified from Hill, 2001)

CBM Solut ons

Natural Gas Storage Capacity in

Unconventional Reservoirs


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HorseshoeCanyon Coal

Zone

Aggregate

Coal Thickness

Author, G.S.C. Hughes

200 m DH depth contour

Surface mining operation

20

18

16

14

1210

8

6

4

2

0

22

Sheerness

Battle River

Dodds

W. Palliser


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Author: Bruce Misanchuk, modified from A.R.C. McCabe et al 1989

Late Cretaceous Horseshoe Canyon And

Bearpaw Formations (Edmonton Group)


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Current Day Analogy

Panama

Swamp to Resource


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Photos courtesy of AGS

Horseshoe Canyon Coals


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Lethbridge

Basal

Rockyford Standard

Drumheller

Weaver

Carbon

Thompson

Coals targeted in Horseshoe Canyonare Upper Cretaceous (Edmonton-Belly

River)

Mean Depth increases to west (150-

700 m)

Total coal thickness varies from 621 m

Up to 53 individual seams over 500 m

of vertical interval, interbedded in

siltstone, sandstones and shales

Coals are low-rank - Sub Bituminous

resulting in lower gas contents, cleat

density.

Geological Summary


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Annualized Type Curve (4 wells/sec)

0

20

40

60

80

100

0 5 10 15 20 25 30

Years

Rate(Mcf/d)

0

70

140

210

280

350

CumulativeProd'n(MMcf)

3%

4%

6%

13%

4%

Decline Rates

Characterized by very low declines

Horseshoe CanyonAnnualized Type Curve


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West Palliser Block Status

Current production18 MMcf/d

>500 wells drilled (+ 80 JV

Exploration)

~ 200 wells producing 2004 ~300 wells (150 YTD)

Land base ~1100 sections

(~5% of fairway)

First bcf of CBM gasproduced in 2003

Calgary

T21

T29

R28 R22


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Horseshoe Canyon Rate Distribution


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Entice 3rd

Party Simulation

Entice Integrated Sand/CBM

Simulated Curve vs Actual


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Engaging Stakeholders

Horseshoe Canyon & Mannville CBM sits directly upon

the most populated areas of Alberta

AEUB G-56 public consultation requirements

- Operational impacts (groundwater, noise, flaring, dust, etc.)- Compensation expectations

- Direct and adverse affects objector standing

- Showing the BIG PICTURE

Public education Public consultation/interaction is a core competency


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Minimal Disturbance Drilling


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Low Impact Operations


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Similar to shallow gas

downspacing

Wellsites


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Similar to

shallow gas

downspacing

Minimal Footprint


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Regulatory Issues

CBM minerals requirements- Currently 1 well/section, need 4 16

- Spacing requires public consultation and approval

- Coal and CBM rights issues must be resolved with split titles

Sand/coal & coal/coal commingling

- Current regulatory framework manages at single pool level- Offset mineral owners must be consulted

Field operations

- Drilling permits must state that CBM is the target

- Completions & flaring require public consultation

- Pipeline permitting and environmental approvals

Ongoing data requirements

- Metering approvals required for group metering and sand commingling

- Yearly testing requirements

- Core requirements for EUB and auditor reserves reporting


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119

40

60

20

352

115 7

22

0 100 200 300 400 500 600

Tcf

British Columbia Foothills

Alberta Foothills

Alberta Plains

East Coast

Minimum

Gas-In-Place

Maximum

Gas-In-Place

Largest fiscal hurdle is Rate of Return Cost reduction

Fiscal constraints

Royalties are already low

Economic

ROR

2018

16

14

12

10

8

6

4

2

0

22

Econo

micROR

?

Fiscal Constraints or

Economic Opportunity?


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Size Matters- Reserves distributions need areal significance & data distributions

- Infrastructure leverage needs critical mass

- Regulatory approval timelines vary considerable, flexibility is an asset

Technical capacity matters

- Reservoir engineering and modeling are critical- Completions are complex both technically and operationally

- Reserves recovery and infrastructure design are closely linked

Public consultation matters

- Downspacing requires public consultation & approval (G-56)

-

Your operational track record matters- Misinformation about CBM abounds in the public

- Know your field practices & have data to back them up

Innovation Matters

What Matters


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Questions?

david rushmore

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