Renewed interest in pumping oil and gas from the south Duvernay shale basin could provide a boost to Red Deer County's economy, industry experts say.
Though the lion's share of investment to date has taken place in the Kaybob region of the sedimentary layer in the Fox Creek area, multi-million dollar projects have increasingly targeted the southern edge of the formation.
“Most of the activity has been focused on the north part of the trend,” said Dan Allan, executive vice-president of the Canadian Society of Unconventional resources, who estimates the commercially viable deposits could stretch as far south as Twp. Rd. 360. “It's only recently that it's been moving south.”
With companies remaining tight-lipped and many wells still in exploratory stages, a lot of uncertainty surrounds the billions of dollars being poured into land acquisitions and drilling operations. But already local economic development teams and provincial regulatory officials are making strides to keep up with the pace of interest in one of Alberta's hottest emerging liquids-rich windows.
“The Duvernay's probably the biggest opportunity,” said Brad Herald, manager of operations for Alberta with the Canadian Association of Petroleum Producers. “This play is really in the proof of concept stage.”
The Duvernay sedimentary basin is credited as the original source rock for much of the early oil discoveries, including the famous Leduc field.
While much of the oil seeped out into easily accessible pools, huge quantities of hydrocarbons remained tightly trapped further up.
Recent developments in fracturing technology have made these extensive deposits economically accessible.
While EOG Resources declined to comment for this article on the results of its Red Deer County wells drilled just east of Sylvan Lake, some nearby wells have produced positive initial results.
In March Talisman reported it had pumped 600 million barrels of oil equivalent in its southern Duvernay extraction operations so far.
One well, located about 60 kilometres northwest of the EOG well, reportedly had a 30-day initial production rate of about 300 barrels a day of condensate with a total liquids yield topping 1,000 barrels per cubic feet of gas.
“That's very high liquids content,” said Dave Russum, director of geoscience for AJM Deloitte, an independent assessment firm that focuses on resources and reserves. But he cautions that initial production can taper off quickly.
“I'm not sure if that's an economic well or not. I think they've got a lot of work to do yet.”
Even if the formation becomes less productive into Red Deer County, area residents will still be needed to help form the basis of a strong labour pool, since unconventional drilling operations are less seasonal, according to experts.
With much of the investment coming from Japanese, Chinese, Malaysian and Korean firms, interest has also been ramping up into developing ways to ship oil and gas overseas.
Recently Central Alberta: Access Prosperity gave four Chinese oil company representatives a tour of industrial land from Innisfail to Ponoka, considering the possibility of locating a liquified natural gas plant in the area.
Red Deer County mayor Jim Wood said such a facility would help drive oil and gas activity in the region.
“It's exciting to think that another firm is looking in this region for some opportunity to export some of our natural gas,” said Wood. “But it also keeps everyone else working within the field, because if there's a market then there's more drilling happening, our service companies are busy and more jobs are created. It would be a huge economic driver for our region.”
The Energy Resources Conservation Board is also trying to anticipate future oil industry exploration and wants to make sure the public is aware of what's going on.
In January the ERCB started populating www.fracfocus.ca with information about the wells going into resident neighbourhoods. Now residents can find out how much water and what chemicals are being pumped into the ground, though they do still protect many trade secrets.
“We're down closer to the ground coming up with practical solutions,” said Bob Willard, senior advisor with the ERCB, noting the potential dangers to air quality, aquifers and if companies don't communicate effectively.
“We've drawn the line pretty sharp here, tighter than other jurisdictions in this regard.”
