RYSTAD ENERGY PRODUCT HIGHLIGHTS Rystad Energy now offers a wide product range of North American shale products (NASAnalysis) as an advancement and extension to the previous North American Shale Quarterly report published until 2012. Watch out video below for more information.
NASReport: Up-to-date play coverage incorporating prospectivity maps, company-specific data, acreage and reserves, production forecasts of plays up to 2025 as well as infrastructure and economics of plays.
NASCube: Database that provides US and Canada shale gas and tight oil plays data for more than 200 companies and 30 plays. Data derives from Rystad Energy’s global and complete upstream database UCube, in addition to well data.
NASMaps: Geological, company acreage and well location maps. Maps are available as pdf-layers and GIS files with embedded information for import to GIS software.
NASWellData: Listing of official well data for key plays in addition to estimates for average well curves for selected acreages.
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In 2013 the two largest Canadian plays in terms of investments were Montney (over $4.5 billion) and Cardium (almost $2 billion). In both of them, the investments decreased in 2013 compared to 2012 levels – overall spend in 2013 was ~11% lower in Montney and ~21% lower in Cardium compared to 2012. The 2014 spend levels are expected to recover and in Montney surpass the 2012 spend by 5% and reach almost $5.5 billion; in Cardium the spend will also recover and will reach above $2 billion (still ~10% lower than 2012 levels). This newsletter compares the well results in the two largest plays in Canada. [Source: NASCube]
The horizontal drilling commenced in Montney in 2005 and started ramping up from 2007. At the same time, the horizontal development in Cardium commenced in 2008 with a steep ramp up from 2009 onwards.
Figure 1 depicts the total number of operated wells* and the average cumulative liquid content for Montney and Cardium. The average liquid content in Cardium is stable at ~70% (above 99% of the total liquids content is represented by crude oil); for Montney, however, we notice a tendency of increasing liquids content as companies move their activity to more liquid-rich areas (e.g. Kaybob, Ante Creek). In 2012, the average liquids content from wells drilled in Montney was as high as 23% (87% of total liquids content was represented by crude oil). [Source: geoLOGIC Systems Ltd., NASReport]
Figure 2 shows the average 30-day IP rates for Montney and Cardium wells. The 30-day IP averaged ~750 boe/d for Montney and ~300 boe/d for Cardium for the wells spudded in 2011, 2012 and 2013**. At the same time, the true vertical depth (TVD) for Montney wells has been on average 1,250 feet deeper than Cardium wells. With regards to Montney, the depth, gas content and higher IPs are closely related. At the same time, the wells drilled in the Montney play are more expensive, on average, than Cardium wells. Operators report an average cost of ~$6.2 million for Montney wells and ~$3.5 million for Cardium wells. [Source: geoLOGIC Systems Ltd., Rystad Energy analysis]
Figure 3 shows the average decline curves for Montney and Cardium split by the five largest producers in 2013 for each play. For the Montney play, wells drilled by Murphy Oil have on average a steep initial decline. Wells drilled by Encana have a high EUR, due to low initial decline and a high hyperbolic b factor. In the Cardium play, the sharpest initial decline can be observed by Vermilion and Lightstream Resources. The decline curves represent averages for the total acreage positions held by the companies. In reality, the decline curves vary from acreage to acreage across the play for a given company. Acreage-specific well curves are available in the NASWellData by Rystad Energy. [Source: geoLOGIC Systems Ltd., Rystad Energy analysis]
*Notethat 2013 values are excluded from the analysis due to incomplete information from official state authorities **Note that 2013 data only includes wells spudded until September 30, 2013 ***Note that the analysis includes wells spudded from January 1, 2011 to September 30, 2013
RYSTAD ENERGY INDUSTRY OUTLOOK
LNG development. As of March 2014, there are no approved LNG export terminals in Canada. Three projects have been proposed by project sponsors – two of them located at Kitimat and one at Douglas Island, with a cumulative capacity of 4.74 bcf/d. By 2020 this capacity would cover ~30% of gas supply in the provinces of British Columbia and Alberta. Additional potential export sites in British Columbia would have, if approved, a cumulative capacity of 20.08 bcf/d. Since the Q4 2013 newsletter, the cumulative capacity of the potential projects has doubled, mostly due to additional potential terminals: Prince Rupert operated by CNOOC (Nexen) with 3.12 bcf/d; Kitsault operated by privately held Kitsault Energy with 2.6 bcf/d and Stewart, operated by privately held Canada Steward Energy Group with capacity of 4.1 bcf/d. In the best case scenario (assuming the approval of all the projects), the combined capacity of 24.82 bcf/d would surpass the entire gas supply from the provinces of Alberta and British Columbia, which is forecasted to peak at almost 15 bcf/d around 2020. As majors including Shell and Chevron are cutting down on global capex, we may see further delays of sanctioning of Kitimat projects. [Source: FERC, UCube]
New legislation. In February 2014, the government of British Columbia announced the proposed tax on liquefied natural gas. This brings a long awaited financial clarity for a number of companies waiting to make their final investment decision. The tax will be levied on the profits from LNG projects at an initial rate of 1.5%. This will rise up to 7% after companies recover the costs of building the shipping terminals. The representatives of British Columbia said that the tax and royalty rates will be lower in BC than in Australia and five states in US where LNG projects are being built. [Source: The Washington Post]
Largest Canadian acquisitions in Q1 2014. In February 2014, a Canadian giant Canadian Natural Resources acquired assets from Devon Energy for $2.8 billion. The transaction included certain conventional assets in Canada, as well as unconventional acreage positions in Montney (~185,000 net acres) and Cardium (~260,000 net acres). In the same month, Petronas announced that it is selling a 25% WI in its Montney acreage for $2.25 billion to Sinopec (15% WI) and Indian Oil Corporation (10% WI). [Source: PLS Derrick]
Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy advisory and research products for E&P and oil service companies, investors and governments. We are headquartered in Oslo, Norway, with additional research teams in India. Further presence has been established in the UK (London), USA (New York & Houston), Russia (Moscow), for Africa as well as South East Asia.