Why Canada is the next frontier for shale oil
CALGARY, ALBERTA: The revolution in US shale oil has battered Canada’s energy industry in recent years, ending two decades of rapid expansion and job creation in the nation’s vast oil sands.
Now Canada is looking to its own shale fields to repair the economic damage.
Canadian producers and global oil majors are increasingly exploring the Duvernay and Montney formations, which they say could rival the most prolific US shale fields.
Canada is the first country outside the United States to see large-scale development of shale resources, which already account for 8 per cent of total Canadian oil output. China, Russia and Argentina also have ample shale reserves but have yet to overcome the obstacles to full commercial development.
Canada, by contrast, offers many of the same advantages that allowed oil firms to launch the shale revolution in the United States: numerous private energy firms with appetite for risk; deep capital markets; infrastructure to transport oil; low population in regions that contain shale reserves; and plentiful water to pump into shale wells.
Together, the Duvernay and Montney formations in Canada hold marketable resources estimated at 500 trillion cubic feet of natural gas, 20 billion barrels of natural gas liquids and 4.5 billion barrels of oil, according to the National Energy Board, a Canadian regulator.
“The Montney is thought to have about half the recoverable resources of the whole oil sands region, so it’s formidable,” Marty Proctor, chief executive of Calgarybased Seven Generations Energy, told Reuters in an interview.
Canada’s shale output stands at about 335,000 bpd, according to energy consultants Wood Mackenzie, which forecasts output should grow to 420,000 bpd in a decade.
The pace of output growth could quicken and the estimated size of the resources could rise as activity picks up and knowledge of the fields improves, according to the Canadian Association of Petroleum Producers.
Seven Generations and Encana Corp, also based in Calgary, are among leading producers developing the two regions. Global majors including Royal Dutch Shell and ConocoPhillips – who pulled back from the oil sands last year – are also developing Canadian shale assets.
Chevron Corp announced its first ever Canadian shale development in the Duvernay in November. Spokesman Leif Sollid called it one of the most promising shale opportunities in North America. — Reuters