CALGARY, Alberta (Reuters) - A new study has identified immense oil and gas resources in Alberta’s emerging shale prospects, suggesting a string of recent takeovers and land buys will yield impressive production gains for some of the world’s largest oil companies.
The province’s shale formations, including the Duvernay, Montney and Muskwa, could ultimately contain 3,324 trillion cubic feet of natural gas, 58.6 billion barrels of gas liquids and 423.6 billion barrels of oil, according to the research, conducted by the Alberta Energy Resources Conservation Board and Alberta Geological Survey.
Such figures put the deposits in league with some of the major U.S. shale plays that have significantly shifted the complexion of the energy industry from conventional operations to horizontal drilling and hydraulic fracturing.
Alberta, though Canada’s largest oil and gas producer, has been behind many other jurisdictions in identifying and tapping many of its shale prospects, so development is still in early stages.
“The numbers fall in line, more or less, with many of the other shales, whether it’s Eagle Ford or Marcellus,” said Andrew Beaton, one of the report’s authors, referring to the big Texas and U.S. Northeast formations where production has surged.
The study’s data came in close to numbers reported by some of the companies exploring on the lands, which cover very large regions of Alberta, Beaton said.
It shows Alberta has huge potential even beyond its oil sands, currently seen as the world’s third-largest crude deposit with about 170 billion barrels of proven reserves and ultimate potential of as much as 1.7 trillion barrels.
International energy companies are making large wagers on the potential. The Duvernay and Montney have been the targets of a boom in energy deal-making, with companies such as Encana Corp (ECA.TO), Chevron Corp (CVX.N) and Talisman Energy Inc TLM.TO amassing land positions to unlock liquids-rich reserves.
Last month, Exxon Mobil Corp (XOM.N) agreed to buy Celtic Exploration for C$2.6 billion ($2.6 billion), raising its reserves in both the Duvernay and Montney.
Talisman has drilled four wells in an initial six-well program on its Duvernay lands, and so far has kept results close to its vest.
One of the major draws is the valuable liquids content of the gas, as dry gas markets remain weakened by a continental glut, Talisman spokeswoman Phoebe Buckland said.
Indeed, the oversupply has built up due to the industry’s success producing gas from shale plays using hydraulic fracturing in the United States and Canada. The technology has also attracted staunch opposition from numerous environmental groups, which warn of groundwater contamination. The industry rejects assertions that its fracking operations pollute water supplies.
According to the ERCB/AGS study, the Duvernay, a formation that cuts across much of north-central Alberta, contains 443 trillion cubic feet of total gas in place, 11.3 billion barrels of natural gas liquids and 61.7 billion barrels of oil, at the midpoint of the estimates.
The Muskwa, in Northwestern Alberta, has an estimated 419 trillion cubic feet of gas, 14.8 billion barrels of gas liquids and 115.1 billion barrels of oil.
The Montney, in Western Alberta, is also a major exploration area in neighboring British Columbia. On the Alberta side, natural gas resources are estimated at 2,211 trillion cubic feet, gas liquids at 28.9 billion barrels and oil at 136.3 billion barrels.
The authors cautioned that the numbers represent “endowment of hydrocarbons” and that geological and engineering constraints as well as economic, social and environmental considerations will ultimately determine the volumes that will be recovered.
“The companies, can say, of course, whether they believe it’s economic or not, but it’s still a learning stage in every one of these formations,” said Dean Rokosh, lead author of the study.
Editing by James Dalgleish and Steve Orlofsky