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Ministry of Energy, Mines and Petroleum Resources Looking to the Future: Development in the Horn River Basin B. Kerr.

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Presentation on theme: "Ministry of Energy, Mines and Petroleum Resources Looking to the Future: Development in the Horn River Basin B. Kerr."— Presentation transcript:

1 Ministry of Energy, Mines and Petroleum Resources Looking to the Future: Development in the Horn River Basin B. Kerr


3 Horn River Basin in Northeast British Columbia Between Liard Basin to West and Slave Point Carbonate Platform to East Over 14,000 60% tenured (rights vary) Access to basin from Liard Hwy (77) in the west and Sierra Yoyo Desan Rd in the east. World class shale basin Introduction

4 Concept Use public information and OGIP mapping to approximate scale of future development

5 Apache Press Release April 8, 2008 - Apache net 207,000 acres. - Apache Encana JV on >400,000 acres. - Apache net gas resource 9-16 tcf. Apache Analysts Review, October 23, 2008. - Majors Land positions. - Production Profiles. EOG Investor Presentation, March 2009. - 157,500 net acres. - ~ 6 tcfe (60% drillable, 25% recovery) Nexen Q1 2008 Earnings Conference Call, October 29, 2008. - 3 – 6 tcf potential reserves. - 123,000 net acres. - assuming 20% recovery. Ross, D.J.K. and R.M. Bustin. Characterizing the shale gas resource potential of Devonian-Mississippian strata in the Western Canada sedimentary basin: Application of an integrated formation evaluation. AAPG Bulletin 2008 92: 87-125. Walsh, W. Unpublished internal maps of Devonian shale gas potential in the Horn River Basin, October 2008. Data Sources

6 GAS IN PLACE MAPPING – - Walsh (EMPR Internal) - Based on isopachs of Muskwa/Otter Pk and Klua/Evie fms - Considered Muskwa / Otter Park and Klua / Evie to be separate and distinct. - Assumed constant shale densities - Varied gas contents through iterations to produce high and low cases - Ross & Bustin (AAPG Bulletin Jan 2008) - Based on isopachs, geochemical analyses of core and estimates derived from calibrated geophysical logs. - Considered free and adsorbed gas capacities - Limited data within Horn River Basin Gas In Place Mapping

7 - Potential OGIP calculated and iso-areas generated and contoured. - Large volumes of gas predicted based on thick packages of shale. - OGIP values applied to Gas DSUs across Horn River Basin for - Walsh low case: 332 TCF mean 53 bcf/dsu, range 0-113 bcf/dsu - Walsh high case: 820 TCF mean 131 bcf/dsu, range 1-287 bcf/dsu - Ross: 782 TCF mean 126 bcf/dsu, range 20-300 bcf/dsu Gas In Place Mapping

8 Much of the Horn River Basin has been tenured over the last 5 years Record land sales in B.C. - price per hectare and total sales For the purpose of analysis of potential future activity subdivide the basin into three areas: 1.Major operators (as identified by Apache presentation October 23 2008) 2.Unknown operators (all other tenure in basin as of March 2009) 3.Untenured land Land Positions

9 “Major Operators” Operators identified in the Horn River Basin Devon Nexen EOG Imperial / Exxon Apache / Encana JV Land Positions

10 Unknown Operators Untenured Land Land Positions

11 DSU OGIP Public * OGIP Walsh Low OGIP Ross OGIP Walsh High Nexen11910-209.914.924.9 Apache**28445-8023.445.959.8 EOG2264020.535.252.6 *Assuming 20% recovery for Apache **Assuming 50% Net of ECA/APA identified land Calculate the OGIP on the lands attributed to companies and compare these values to volumes from press releases. Walsh estimates for OGIP resource “bookend” company statements and Ross values. Relating OGIP Mapping to Potential Reserve Statements

12 Land CategoryDSU OGIP Walsh Low ROSS OGIP OGIP Walsh High Major Operators1500125231320 Unknown Operators2760122306293 Untenured Land197185245207 Total6231332782820 Calculate the OGIP on categories of lands Major Operators Unknown Operators Untenured Land Relating OGIP Mapping to Potential Reserve Statements

13 Two scenarios – Walsh Low / High Case OGIP - Consider availability of land for drilling - Exclude 10-30% of land from development as inaccessible on land holdings of major companies - Exclude 30-50% of land from development for unknown companies for time frame of analysis. - Exclude 70% of untenured land from development as unprospective* - Consider recoveries on land that is drilled - 20-30% recovery - Consider potential production profiles and EUR per well - IP 4.9 mmcf/d, EUR 5.5 bcf - IP 3.3 mmcf/d, EUR 4.1 bcf * >95% of the basin is interpreted to have more than 30 bcf OGIP per DSU Development Scenarios Access and Recovery

14 Drilling Activity Major Operators Lands – 20 year full development Unknown Operators Lands – 30 year full development Untenured Lands – 40 year development Development Scenarios Pace and Production

15 Annual Drilling – Pessimistic OGIP, Limited Accessibility, 20% recovery, 4.1bcf/well Conventional Majors Unknown Untenured Development Scenarios Pace and Production

16 Conventional Majors Unknown Untenured Annual Drilling – Optimistic OGIP, Good Accessibility, 30% recovery, 5.5 bcf/well Development Scenarios Pace and Production

17 Pessimistic Shale Forecast Development Scenarios Pace and Production Optimistic Shale Forecast BC’s Current Production

18 DSU Press ReleasePessimisticOptimistic Nexen1193-61.46.7 Apache2849-163.316.1 EOG22662.914.2 - If these development scenarios were applied on company lands, how would they compare to potential reserves as announced? Development Scenarios Validation

19 Resources needed to support drilling and completions - Frac Sand - Water Frac Sand (tons)Water (m3) Pessimistic8,849,100102,105,000 Optimistic19,743,100227,805,000 Max Annual1,404,00016,200,000 Max Annual Water – 25% of Annual Water Use in CRD (Greater Victoria) Max Annual Frac Sand – 150+ truck loads of sand per day. Service Requirements

20 - Large volumes of gas in place - Significant reserve expectations - Successful development of play will require 10’s of thousands of wells - Development over 20 years will require unprecedented activity levels - Peaking at 3 wells rig released every day of the year - Optimistic case as presented (16,000 wells) is development of 62% of the sections in the basin. Summary

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