$1-trillion energy bonanza still buried
Oil and gas left in old wells can be extracted by using new technology, experts reveal
Gordon Jaremko
The Edmonton Journal
Tuesday, June 13, 2006
EDMONTON - A new energy treasure map drawn by industry and government experts points the way to a $1-trillion oil and gas bonanza buried in aging wells in Western Canada.
The astronomical added wealth can be reaped chiefly in Alberta by investing $12 billion to $15 billion over the next 15 years to tap oil and gas left behind by conventional production methods, the new guide estimates.
Gains of six billion barrels of oil and 22.5 trillion cubic feet of gas can be made by using known technology to improve recovery of discovered resources to 36 per cent of the amount in the ground from the current western Canadian average of 27 per cent, the experts predict.
"We're saying that is do-able," Eric Lloyd, president of Petroleum Technology Alliance Canada, said in an interview Monday as the study team led by his group and a government-industry information partnership known as EnergyINet launched efforts to ensure production improvements are made.
Hitting the increased efficiency target would generate $1 trillion or more in added industry and government revenues even if oil fell to an annual average $45 US a barrel and gas remained in its recent weakened price range of $7 per thousand cubic feet, Lloyd said.
"This isn't rocket science that's needed," added EnergyINet chief executive Michael Raymont.
"It's adoption and adaptation of technology that's on the leading edge now."
The treasure map -- a report called Ramping Up Recovery: A Business Case for Increased Recovery of Conventional Oil and Gas, and a mammoth digital technology and earth sciences data base -- was generated by a $960,000 research project.
Contributors included the Alberta, federal, British Columbia and Saskatchewan governments, an industry cross-section of 27 firms ranging from ARC Resources to Talisman Energy, and the 250-company Petroleum Services Association of Canada.
Business access to the detailed report and data warehouse is restricted to companies which participated in the research for two years. Results include production opportunities derived from confidential corporate data on oil or gas fields and technology.
Companies which took part in the effort will start new work on improving production efficiency before the two-year secrecy period ends in order to use the temporary competitive advantage, Raymont predicted.
A steering committee will be set up to urge companies into taking action on extracting the most from assets that date back to the 1950s and could still be rich if 21st century methods are used on them, Lloyd added.
"This is not about the oilsands. It's not about coalbed methane. The basis is existing conventional wells and oil and gas pools," Lloyd said.
"It's not white-lab-coat research and development," Raymont said. "I'd put it more in the category of engineering than fundamental discovery."
Key technical areas for improvement include use of advanced methods of mapping geological reservoirs, handling and management of "produced water" from oil and gas wells, drilling methods and injections of materials such as carbon-dioxide, Lloyd said.
Handling water from geological formations is a critical issue, he said.
On average, western Canadian wells flow 12 barrels of brackish water for every barrel of oil they produce. Technical improvements range from disposing of waste water underground without first letting it flow to the surface to injecting it into oil or gas reserves as a way to increase or extend production.
The new guide to oilfield improvements does not recommend government aid such as royalty or tax incentives, Lloyd said. But longer-range technical work could require help with royalties, taxes or research budgets to offset risks of trying new methods, Raymont said, adding that governments will be major beneficiaries of new revenues generated by production gains.
gjaremko@thejournal.canwest.com
