What is the Montney Formation - Where is the Montney Shale Located? The Montney
Shale Natural Gas Field is located in British Columbia, Canada and extends into Alberta. The Montney Shale Play
is located in the Dawson Creek area just south of the Horn River Shale. Over the past few years, natural gas prices have been soaring to new heights and companies have been looking at
unconventional resource plays such as shale formations to extract natural gas. Geologists have known about the Montney
Shale for a long time. Low natural gas prices combined with the lack of technology has caused this shale play to be
ignored. Until Now!
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The
Montney Shale formation is a rock deposit located deep below British Columbia, Canada. Natural Gas can be found in large
quantities trapped in this tight shale play. Companies have been sweeping up land leases all across this area with the
goal to explore and drill for the natural gas.
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How is Natural Gas extracted from the Montney Shale? Companies drill vertical wells in the
Montney formation and then drill across or horizontally. In most cases, drilling a horizontal well can net you up to
five times more natural gas then a vertical well. The cost of drilling a horizontal well is roughly double that
of a vertical well. New fracturing techniques have really made these shale plays like the Montney Shale, profitable.
Companies shoot millions of gallons of water with the combination of sand at high pressures at the shale rock causing it to
fracture. In most shale formations, an 8-12 stage fracturing program is used to get at the natural gas. This can
take 30-45 days versus back in the 1980's it took 60-75 days to complete. This is possible thanks to new and
improving technology that is being used now a days causing the shale plays to be even more profitable then ever
before.
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Record
Land Leasing in the Montney Shale area! It is estimated that the Montney Shale holds up to 50 trillion cubic
feet of natural gas while the Horn River Shale has the potential to be much greater. While it is a bit early to tell, this isn't stopping companies
from leasing land at record prices. On July 18th, 2008, British Columbia Oil & Gas rights
auction set a new record of $610 million dollars for the right to drill at British Columbia's Montney Shale area.
A total of 146 parcels covering 134,196 hectares ( average of $4,596 per hectare ) were won with some buyers paying up
to $32,500 per hectare for drilling rights. ( 1 Hectare is equal to 2.47 Acres ) This brings the
total so far this year in British Columbia for shale rights leasing to nearly 1.5 billion dollars! One Parcel just West
of Dawson Creek sold for $157 Million Dollars. This would appear to be one of the core areas in the Montney Shale
formation. Get ready, The next auction, scheduled for Sept. 10, will offer 105
leases covering 92,973 hectares..
The Montney
Shale natural gas field is heating up! Encana started snapping up land years ago for $800 a hector ( roughly
$324 an acre ) and are the largest operator in this play to date. Shortly before the $610 million auction in July, Shell Canada bought Duvernay Oil Company for C$5.9 billion dollars. Duvernay has 450,000 acres in the Montney Shale and Alberta's Deep
Basin.
New Montney Shale pipeline:February 26, 2009 - TransCanada is also encouraged by strong commercial support it has received for the developing shale gas reserves
in the Montney formation of northeast B.C. as it has recently concluded a successful binding open season for gas transmission
service from the Groundbirch area located west of Dawson Creek. Shippers have committed to firm gas transportation contracts
that will reach 1.1 billion cubic feet per day by 2014. The proposed Groundbirch pipeline will be approximately 78 km
in length and is expected to commence service in fourth quarter 2010, subject to regulatory approvals. The project is
expected to cost approximately $250 million.
Companies Drilling in the Montney
Shale - Montney Shale Stocks
Encana ECA - Encana was an early arriver to the Montney Shale aquiring acreage around five years ago. In northeast British
Columbia and northwestern Alberta, our already strong land position in the Montney play has expanded to more than
700,000 acres. With that, EnCana has the largest disclosed land base in this emerging unconventional gas field.
We're
drilling about 60 wells in the Montney this year
and then we're probably getting close to about 180 million cubic feet a day just out of the Montney alone.There's probably on the order of about 15 rigs running in the play;
ourselves, I think we have four or five rigs running in the play.The Montney looks very encouraging. The costs continue to move down. We're doing our completions, frac completed,
tied in, everything for on the order of less than $700,000 per interval now, so very attractive finding and development costs,
sort of $1.50 range, even lower than that. So things are continuing to progress well in the Montney and we do have a tremendous land position and we're testing some more areas
on the Montney, so we're very encouraged by it.
Talisman Energy TLM - Talisman Energy ( TLM ) has been very active in the Montney Formation -
Talisman’s
Montney play encompasses approximately 600,000 net acres of land. This land base provides Talisman with many opportunities
at different states of maturity.
The Montney Core is in northwest Alberta
and northeast British Columbia and is in early development. It is primarily sand/siltstone geology compared to the Montney
shale play of northeast British Columbia. In the Montney Core, Talisman holds 380,000 net acres and drilled 39 gross
(31.1 net) development wells in 2008 with total yearly average Company interest production of 35 mmcfe/d (5.8 mboe/d). In
addition, Talisman continued to pilot various areas in the Montney Core play throughout 2008 by drilling 13 gross (11.2 net)
pilot wells to test drilling and completion techniques and quality of the reservoir. Talisman plans to drill up to 35 gross
(26 net) development wells in 2009, with horizontal wells drilled primarily from pad locations.
The Montney Shale - At the end of 2008, Talisman held 220,000 net acres of land in the Montney Shale
play, drilling nine gross (3.2 net) wells during the year. Also in 2008, the Company successfully tested a vertical well in
the Farrell Creek area. Talisman intends to continue piloting these areas throughout 2009, with plans to drill 14 gross wells
and build processing facilities. Talisman expects to begin development by the end of 2009 or in early 2010.
Programs in both the Montney Core and the Montney Shale play provide options to accelerate drilling
if warranted by results or the availability of additional capital.
Montney Shale Map
Montney Formation Map
Approach Resources AREX - AREX has been drilling in the Montney Shale play - ( From Seeking Alpha ) The first three wells targeted the Montney and the Doig we have stimulated the [inaudible] in the other two wells, we are waiting on the pipeline
connection so we can flow test these wells. The play continues to be robust in that there are a lot of players out there paying
extremely high prices for acreage, but until we get this pipeline in we can’t really flow test these wells. The Montney
structure in itself looks good. One thing about the Montney
in this area is nothing more than a tight gas plate. It is just like our Ozono Northeast plate, except it has a little more
pressure to it, it has variability’s just like a normal [inaudible] would have, porosity variability’s, permeability
variability’s, you can look at the development around the core fields, the Dawson Creek Field, where Douvenet is working,
where Ark is working, and they are working on core areas that have higher porosity.
Occidental Petroleum - OXY -
Occidental is testing the Montney Shale and will be providing details at a later time.
