Stealth Ventures Ltd. - Frequently Asked Questions

Frequently Asked Questions

FAQ's courtesy of the Canadian Society for Unconventional Gas.

Answers

Unconventional Gas

What is unconventional gas?

Unconventional gas is simply natural gas that is contained in “difficult to produce” rock formations, which require different or special completion, stimulation, and/or production techniques to retrieve the resource. Natural gas from coal (NGC), also known as coal bed methane (CBM) or, in British Columbia coalbed gas (CBG), along with tight gas sands, shale gas, and gas hydrates are all examples of unconventional gas.

In the past, technical challenges and cost issues around producing unconventional gas deterred resource exploration and development. However, as conventional gas resources are becoming depleted, and the need for energy has increased, the necessity for developing alternate resources has become important. Although production of unconventional gas in Canada is very recent, it is anticipated that by 2025, unconventional gas will account for about 80 per cent of the new drilling, and 50 per cent of total gas production. The goal of the Industry is to responsibly develop this resource while taking into consideration the social, economic, and environmental impacts of development.

Source: CSUG Strategic Priorities document

For more information on unconventional gas, see the Centre for Energy’s website.

Why do we need unconventional gas?

Our known conventional sources of natural gas in North America are declining rapidly. According to the National Energy Board (NEB), gas production in Canada peaked at 22 billion cubic feet per day (bcf/d) in December, 2000 and has been decreasing since then. “New gas finds are needed every year simply to offset a 20 per cent natural decline rate in production from existing wells”. With demand for natural gas expected to remain strong for the foreseeable future, most, if not all of the available new supply sources will be required (such as Arctic gas, imported Liquefied Natural Gas (LNG), Alaskan gas, Nova Scotian gas, and CSNG) to meet consumer demand in North America. Industry and government see NGC as having an important role to fill in reducing the gap between future demand and declining conventional production. If this gap is not reduced with new sources of natural gas, we could see an increase in the consumption of other less cleaner fossil fuels and/or increases in the price of natural gas.

NGC has a resource base comparable to the remaining undiscovered conventional resources of Western Canada. In a recent NEB draft publication on “Canada’s Energy Future”, it estimates Western Canada Sedimentary Basin (WCSB) undiscovered potential at 71 to 99 trillion cubic feet (tcf) of natural gas, with WCSB estimated at 75 tcf. The above chart compiled by the Canadian Gas Potential Committee estimates the NGC resource to be between approximately 150 to 500 tcf in place. Recent estimates by the NEB and TransCanada Pipelines (TCPL) suggest that NGC could contribute anywhere from 0.7 bcf/d to over 3 bcf/d or up to approximately 10% of Canada’s current natural gas production.

Source: Exploration and Development of Natural Gas from Coal (NGC) in Canada – Facts and Issues, produced by CSUG 2003

Please visit to the Centre for Energy website for another explanation on the decreasing supply of natural gas.

Natural Gas from Coal (NGC) or Coalbed Methane (CBM)

What is natural gas from coal?

Natural gas from coal (NGC), coalbed methane (CBM), or coalbed gas (CBG) in British Columbia is simply the natural gas found in most coal seams. Methane is the principal component of natural gas. CBM is created during coalification, the natural process that converts organic matter into coal over time. A seal created by overlying rock and/or water within the fractures of the coal seam keeps the methane 'adsorbed' or attached to the coal.

Like conventional natural gas, NGC is a cost-effective and clean-burning fuel that has many applications, such as heating your home. It is generally considered to be more environmentally friendly than oil or coal and requires minimal processing.

Source: Exploration and Development of Natural Gas from Coal (NGC) in Canada – Facts and Issues, produced by CSUG 2003

Please see the BC Ministry of Energy and Mines web pages on coalbed gas, which includes an FAQ on coalbed gas in BC.

Please see the Alberta Energy website, which includes an FAQ on natural gas from coal.

Why are different names used?

In the United States, the gas is generally referred to as coalbed methane (CBM) or coal mine methane (CMM)
Alberta uses Natural Gas from Coal (NGC), since natural gas rules apply, and CBM. In CSUG materials, we will refer to the resource as Natural Gas from Coal.
British Columbia calls it coalbed gas (CBG)
In Australia, coal seam methane (CSM) is often used

Whatever name is used, it is the same thing - natural gas that is produced from coals.

Source: Natural Gas from Coal fact sheet - CSUG

How is Natural Gas from Coal Created?

Please see Trident Exploration Corp.'s website for a description of how natural gas is created from coal.

How is natural gas from coal produced?

Simply put, NGC is produced by reducing the natural pressure within the coal seam to allow the gas to release from the coal and flow into a well then towards the surface, where it is compressed and transported through natural gas pipelines.

Typically, a steel-encased hole is drilled into the coal seam. Next, the coal seam is fractured by injecting fluid (typically water-based foam and and sand or an inert gas such as nitrogen), down the well, and into the seam's 'cleats' or natural fractures. This opens the cleats and creates a channel through which the CBM can flow. If required, the coal seam is then de-watered. De-watering removes the water that naturally exists within the cleats of the coal using a pump located at the wellhead. This reduces the pressure in the coal seam and allows the gas to flow into the well bore and up to the surface. The gas is then collected and compressed into a pipeline to be shipped to your home.

Source: Exploration and Development of Natural Gas from Coal (NGC) in Canada – Facts and Issues, produced by CSUG 2003

Also see the Centre for Energy’s website for a description of drilling for and testing an NGC well.

Where is NGC/CBM found in North America, Canada, Alberta and BC?

This link shows a map of North American coalbed resources and links to data on information such as estimated resources in each field, etc.

A map on the potential of CBM in Alberta is available at the Alberta Geological Survey website.

Maps on CBM potential in BC can be found at the BC Ministry of Energy and Mines website.

Shale Gas

What is Shale Gas?

Shale gas is natural gas contained within shale sequences. The gas is stored in shale in two major ways:

As adsorbed gas on kerogen (insoluble organic matter). The adsorbed gas portion range
The second component of gas is present as free gas in the matrix porosity and fractures. This component is compressible and in this regard, is similar to conventional gas reservoirs. Unlike conventional hydrocarbon targets, gas shales act both as a source and reservoir rock. This gas is either biogenic, formed by the action of biologic organisms breaking down organic material within the shale, or thermogenic, formed at depth and higher temperatures.

Gas shales are considered continuous type natural gas plays in that they are pervasive across large geographic areas and the reservoirs generally have a long life (Hill and Nelson, 2000). Most gas shales have very low permeability (they are a ‘tight’ gas), and production rates are usually quite low, with low recovery factors that are a fraction of conventional reservoirs. The area extent of the deposits and the longevity of shale gas wells compensate for low flow rates. Commercial production is very sensitive to drilling and completion costs. In the US, fracture stimulation is almost always needed to achieve economic gas recovery.

Source: Shale Gas Overview, CSUG

For an overview of shale gas in general, see the Centre for Energy’s website.

For an overview of shale gas in BC, see the BC Ministry of Energy and Mines website.

How is shale gas produced?

Shale gas is produced in much the same way as conventional reservoirs. Due to the low permeability inherent in gas shales, stimulation is almost always required. Fracturing the shale is required in most situations to achieve economic production. In the US, gas shale reservoirs have proven to have fairly low production rates with a long well life with fairly low recovery rates. This means that drilling and completion costs have to be kept to a minimum. Additionally, technologies continue to be developed to increase the recovery percentage and effectively stimulate the shale at minimal cost.

Due to the relatively low production rates anticipated from gas shale wells, development of this resource will likely involve a fairly high density of wells. Innovative field design, drilling directional wells from a single pad, and other means, will likely be used to minimize surface disturbance. It is also anticipated that shale gas development may proceed in areas where conventional gas production is in decline to take advantage of existing infrastructure and gathering systems. Recompleting existing dry or declining wells may offer a cost effective means of developing shale gas resources in some areas.

Regarding the exploration for and the development of shale gas, industry applies the knowledge and experience gained from producing conventional and other types of unconventional reserves such as tight gas. There are some aspects of production that will be different but there are also some similarities.

Source: Shale Gas Overview, CSUG

Why is the oil and gas industry interested in shale gas?

By 2010, North American natural gas demand will approach 30 Tcf per year. US natural gas demand is expected to exceed 25 Tcf per year by 2010 (DOE, 2000). Canadian domestic demand for natural gas is expected to add an additional 3.6 Tcf per year to North American demand (NEB, 2003). To meet this demand, producers will have to increasingly turn to unconventional resources such as shale gas.
Shale gas is a large potential resource in the WCSB. The GTI estimates conservatively that there is approximately 86 Tcf of shale gas contained in the shales that make up the majority of the sedimentary package. Technological advances in completions and well stimulation in the US is increasing recovery factors and improving the economics of marginal shale gas fields.

Canada has always been a leader in technological advancement of the energy industry. As shale gas becomes a greater focus in Canada industry, new technologies will no doubt be developed to meet the needs of the domestic industry. Experience gained in the commercial development of tight gas sands in Canada will likely contribute to the successful development of shale gas.

Source: Shale Gas Overview, CSUG