Inexpensive natural gas

New drilling technology makes the production of natural gas less expense. The same technology opens up new shale reserves that could never have produced with old technology.

Horizontal Drilling (HD) and sister technology Multi-Stage Fracing (MSF) are lowering production costs, improving economics on current oil and gas fields and opening up massive new fields that were previously not profitable.

Companies usually drill down thousands of metres – vertically – for oil or gas. But now they have the technology to turn the drill bit deep in the ground and drill out horizontally along an oil/gas reservoir for thousands more metres – accessing much more hydrocarbons.

More importantly, the industry has figured out how to break up the rock formations that hold the oil – fracing – which can increase production from wells 4-7 x. That bears repeating – an HD well can increase production 400%-700% over conventional vertical wells.

That’s why more than 40% of all wells in North America are HD wells – and it’s steadily rising. Onshore natural gas production in the U.S. is up 9.6 billion cubic feet per day (bcf/d) since 2002 – almost all of it Texas shale gas that uses HD.

For natural gas consumers, this technology is great news – it should mean lower prices for at least the next several years. With HD/MSF, gas producers like Canadian giant Encana, EOG Resources and several dozen intermediate/junior companies have discovered how to get the gas out of new formations in Alberta and British Columbia that total potentially 10x Canada’s current natural gas reserves.

The same technology applies to oil fields.

Several new low cost oil and gas plays in North America are using HD. The Bakken formation in Saskatchewan and North Dakota has become famous in the industry for increasing production from almost zero to more than 40,000 barrels of oil per day (bopd) now, with over 800 HD wells drilled. The U.S. Geological Survey (U.S.GS) estimated over 4.5 billion barrels of original oil in place (OOIP) in the U.S. part of the Bakken. That is a huge number.

The numbers are mind boggling for British Columbia when you consider that Canada needs 3 Tcf for it’s domestic use. (Unfortunately, B.C. has a carbon tax on natural gas in an effort to reduce it’s use.) 

While it’s still early days in the ongoing exploration for the tight gas and shale gas in North East British Columbia and North West Alberta, several gas bearing basins are estimated to have a combined total of more than 1000 trillion cubic feet (Tcf) of gas! Source.

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