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April 10, 2008

Some natural gas and oil plays

The Horn River Basin, very little was known about the play until Feb 28, 2008, when Houston-based EOG Resources Inc. said it might have reserves of six trillion cubic feet - the same as Mackenzie Delta, Northwest Territories, and a figure that would increase Canada’s total proved reserves by roughly 10 per cent.

EnCana Corp. of Calgary - which claims the initial discovery of Horn River’s potential - and partner Apache Corp. of Houston may also have 6 trillion cubic feet of gas, Apache said in early February.


British Columbia is set for a frantic land grab by natural gas explorers, following months of speculation and intensified by last week’s announcement of what could rank among the largest gas discoveries in Canadian history. Land sales are conducted twice a month in Alberta, once a month in British Columbia, and every two months in Saskatchewan. Wells at Horn River are expensive, roughly $10-million per hole. Horn River - as well as the hot Montney play further south in the same area of B.C. - faces challenges beyond geology, led by its remoteness, where drilling is conducted in winter because rigs can only make it to locations when the rugged ground is frozen.

Montney natural gas is potentially one of the largest economically viable resource plays in North America, says a report by Raymond James Ltd.

Estimates for gas content in the sandstones, siltstones and shale sequences of the Triassic-aged Montney formation in northeastern British Columbia put the resource size at about 50 trillion cubic feet (tcf) over an area of about 680 square miles (73 billion cubic feet per section). This estimate is near the bottom end of the range of the B.C. government estimates of 30 tcf for the Upper Montney and 50 tcf in the Lower Montney in B.C. alone. the report says. The current focus is the Upper Montney which is being developed by drilling horizontal wells with multi-stage fracs. The economics have improved from a break-even prospect using vertical wells to a 27% expected internal rate of return (IRR) using horizontal wells. The limited facilities and pipelines in the areas will constrain significant production growth until new infrastructure is added. Raymond James says wells in the Barnett Shale play in Texas show similar characteristics to the Montney (for example, first-year average production), but the Barnett wells have higher internal rates of return -- primarily due to faster completion times -- and hence lower wells costs. In the Montney, average horizontal well costs have fallen to the $4-$5.5-million range (drilled and completed) -- much better than 18 months ago when some horizontal wells were still costing $7-$8 million, the report says.


Montney players (either on the producer or service side) include Murphy Oil Corporation, Ensign Energy Services Inc., Storm Exploration Inc. and Sabretooth Energy Ltd., EnCana Corp, Duvernay Oil Corp. and Birchcliff Energy Ltd, ARC Energy Trust among others.

Oil Mega projects starting in 2008.


OIL Projects 100,000 barrels of oil per day or larger, Big to smaller
Country Project Name Company Peak Yr Peak amt bopd
Saudi Arabia AFK Aramco 2009 500,000 [Abu Hadriya;Fadhili;Khursaniyah]
Russia Vankorskoye TNK-BP Rosneft 2017 420,000 bopd towards the end of 2008
Mexico Amatitlan PEMEX 2029 393,000
Saudi Arabia Hawiyah Aramco 2009 318,000 (NGL)
Azerbaijan ACG Phs III BP 260,000 [Q208]
USA Thunder Horse BP 250,000 End of 2008
Canada Cold Lake CNRL 2018 240,000
Nigeria Agbami Chevron 2010 230,000 [first oil Q308, ramped up Q309]
Nigeria Akpo Total 180,000 [Probably early 2009]
Brazil Marlim SM2 P-51 Petrobras 180,000
Brazil Marlim Leste P-53 Petrobras 180,000
Russia YK Lukoil 2009 150,000
Kazakhstan Dunga Maersk 150,000
Canada Firebag; Steepbank Suncor 2010 140,000
Qatar Ras Laffan QP 140,000
Canada Horizon CNRL 135,000
Iran Azadegan P1 NIOC 2012 125,000
Norway Alvheim; Marathon 2009 120,000
Nigeria EA expand Shell 115,000
Iran Darkhovin P2 NIOC 2008 110,000
Brazil ML(FPSO C d Niteroi) Petrobras 100,000
Angola B15 Kizomba C (Mondo) ExxonMobil 100,000
Angola B15 KizC(Saxi;Batuque) ExxonMobil 100,000


Saudi Arabia announced on Thursday that they will start adding 500,000 bpd to its total capacity when the Khursaniyah field comes on stream this month. Abdulaziz al-Judaimi, vice president of new business development at Saudi Aramco said, "The Khursaniyah field will start producing within a month at 300,000 bpd and will eventually add 500,000 bpd to the country's production capacity."

The United states has the Thunder Horse deep sea oil project in the Gulf of Mexico, which should produce 1 billion barrels of oil with 250,000 barrels per day. The Bakken needs pipelines and refinery capacity to reach its full potential, which I think is (US and Canada combined) 250,000 bopd by 2008 and 500,000 bopd by 2010 and 1 million bopd by 2013 and 2 million by 2015. Bakken could go higher but then it would require new drilling technology advances for higher recovery. I think that will happen as well.

Suncor 240,000 bpd in 2007, targeting 270,000-300,000 bpd average in 2008. Probably 350,000 bpd by yearend as still 248,000 bpd in April, 2008

The US part of the Gulf of Mexico could be producing a daily yield of 800,000 and accounting for 11 percent of US oil production by 2011. This would be follow up to the Jack2 test well by Chevron, which indicates 3-15 billion barrels of oil.

Saudi AFK production to start in June, 2008










The big one in 2009 is Saudi Arabia, Khurais 1,200,000 bopd

FURTHER READING

Oil fields in the USA

Canadian Natural gas deliverability 2007-2009

EIA on natural gas until 2030 The trend has been increasing reserves and increasing demand.




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