Unconventional Gas Hits Bay Street

I had the pleasure of speaking at the Genuity Capital Markets ‘Unconventional Oil and Gas Conference' in Toronto earlier this week. Genuity staged an excellent conference witha very interesting cross section of companies presenting updates on their unconventional activities.

The day's presentersincluded Talisman, Nexen and Encana all of whom left little doubt that unconventional gas will be a major part of their activities in the next year. Fairborne Energy and Tristar Oil and Gas provided excellent insights into their activity in the Nordegg gas in west central Alberta and in southeastern Saskatchewan's Bakken respectively.

We heard that horizontal drilling and multi-stage fracs are the common features in most unconventional oil and gas recovery schemes today. Tristar are now experimenting with eight short horizontals per section in the Bakken. These "shorties" of about 600metres in length each receive nine staged fracs. This compares to the previous procedure of drilling four 1400metre horizontal wells per section with nine staged fracs. This approach doubles the number of fracs per section, reduces the inter-fracture distance and should increase fracture efficiency and oil recovery.

None of the unconventional success could have been achieved without the contributions of service companies who were represented by Packers Plus, Trican Well Services and Halliburton. Each provided their perspectives and specific methods for enhancing the ‘multi-frac' process to more efficiently produce hydrocarbons.

I presented an overview of North American oil and gas production, touching on the radical changes we've seen with the move from conventional to unconventional supplies for both oil and gas.

With all the talk about how technology is changing the drilling and production process, I was asked whether higher initial productivity translates into higher reserves. Not a simple question to answer because there is a tendency to focus on the most productive wells and ignore the less stellar results. It is important to remember that while high initial production is encouraging, it is the rate of early decline and the change in production over time that provides a clearer indication of ultimate reserves.