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.
April 21, 2010 - Encana ( ECA ) Entered into farm-out agreement with Kogas Canada Ltd.
(KOGAS), which will invest up to C$565 million over three years towards earning a 50 percent interest in about 154,000 acres
of land in the Horn River shale play and Montney formation in the Greater Sierra and Cutbank Ridge key resource plays
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’ve
also been very active at Cutback Ridge in the Montney
formation where we currently have approximately seven rigs active. We continue to see excellent results with our horizontal
wells in this area with 30-day initial production rates averaging in excess of 500 Bcfe/d.
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.
"In the Montney Shale, we continued the development program
at Farrell Creek, drilling three horizontal development wells, with production of 22 mmcf/d in March. We also drilled three
pilot wells in the Greater Cypress area. In Quebec, we tested our first horizontal well at St. Edouard, with 30-day initial
production rates of 5 mmcf/d. Two additional horizontal wells were also drilled in the quarter, which will likely be tested
in the second half of the year.
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.
