DUVERNAY SHALE: BEFORE AND TODAY
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.


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 well data analysis 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, NOW AVAILABLE in CUBE BROWSER.




RYSTAD ENERGY INDUSTRY HIGHLIGHTS
LNG development. As of September 2014, there are 17 proposed LNG projects in North America, 14 located in the US with a combined capacity of 16.89 bcf/d and 3 in Canada with a capacity of 4.74 bcf/d. New potential LNG projects were introduced in Canada since the last CA Shale Newsletter; as of September 2014, the combined capacity of all potential Canadian LNG sites reaches almost 28 bcf/d. Rystad Energy doubts that all of the potential LNG export projects will come online. This assumption is based on the forecasted gas export potential in CA of ~11 bcf/d in 2025. The gas export potential takes into account the gas production forecast at the forward prices with a shale gas upside in the high price scenario (6 $/kcf), less the domestic demand for gas. [Source: FERC, NASReport]

New legislation. In July 2014, the Alberta Energy Regulator (AER) announced upcoming changes to regulations concerning unconventional oil and gas development in Duvernay.  The regulatory changes require E&P companies to assess the environmental impact of the combined activities on their acreage. The pilot program will be implemented in 2015 and if successful could have an impact on the application process across other Canadian provinces. [Source: AER]

Largest Canadian acquisitions in Q3 2014. During the third quarter of 2014, there was one acquisition which surpassed $1 billion in value in Canada. In September 2014, Encana divested its 54% stake in PrairieSky Royalty for $2.33 billion. [Source: PLS Derrick]



CONTACT
NAS@rystadenergy.com



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In 2014, the average daily production from Duvernay Shale is expected to reach ~60 kboe/d with ~50%  liquids. Rystad Energy estimates that during 2014 the industry will invest ~$2 billion for drilling and completions in the play. Overall, the industry holds more than 5 million acres, which translates to ~6 billion boe of remaining commercial resources.


 
Rystad Energy has revised Duvernay Shale's forecasted 2025 production upwards by 20% from ~390 kboe/d to ~470 kboe/d over the last couple of years. The main drivers for the revision are:
 
1) Duvernay has seen a shift from exploration drilling towards development drilling – most notably in the northern part of the play, Kaybob. Looking at the company acreage map above, the acreage in Duvernay can be split into three geographical areas: Kaybob in the north, Edson in the middle and Pembina in the southern part of the play. Kaybob is the area where Duvernay leasing activity is most mature. It is expected that future entries into Kaybob will happen through acquisitions or joint ventures. At Edson and Pembina, the industry also acquired significant acreage positions, but these areas are still in the exploration phase. So why is Kaybob the “hot spot” of Duvernay? According to official well results, the average 30-day IP rates are ~35% higher in Kaybob as compared to Pembina; furthermore, the wells in Kaybob have an average light oil content of ~33% (compared to ~29% in Pembina).
 
2) The second striking fact is that Majors take the lead among the acreage holders – Shell is the second largest landholder in Duvernay with 360,000 net acres; Chevron holds 325,000, ConocoPhillips 120,000 and ExxonMobil 104,000 net acres. Also other acreage holders (CNRL, Talisman, Encana etc.) are companies with large market caps and deep pockets. This is useful because drilling the deep Duvernay is expensive. Based on industry reporting, an average Duvernay well costs $13-15 million, which is among the most expensive onshore wells in North America. As depicted in Figure 1, Duvernay underlies a number of formations in the Alberta Deep Basin, reaching depths up to 14,800 feet.


 
Despite its depth, Duvernay has a surprisingly high liquid content. Based on the industry reporting, the average liquid content in Duvernay is ~50% (light oil and NGL combined). Particularly important is the condensate content (~30% on average). There is a growing demand for condensate in the Western Canada, given its use as diluent in the oil sands production. Figure 2 provides an overview of the 30-day IP rates, showing a positive learning curve, which correlates with increasing lateral length of the wells.


 
3) It is about Capital. Capital is required to unlock the resources of Duvernay. Rystad Energy forecasts that over the next ten years the industry will invest ~$5 billion on average per year in drilling and completions. The key service segments driving this spend are depicted in Figure 3. Around 30% of the overall spend is represented by well stimulation services.


 
 
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.