Canada’s Liard Basin among the richest shale reserves in the world – new study shows

Land Drilling Rig and Cloudy Sky
Source: DollarPhotoClub

Move over Marcellus; the Liard Basin, a natural gas deposit straddling British Columbia, Yukon and the Northwest Territories could be one of the largest in the world, according to a recent assessment. Canada’s federal National Energy Board, alongside its regional provincial counterparts, published a study on the Liard shale basin that shows it holds an estimated 219 trillion cubic feet of natural gas, enough to meet Canada’s natural gas needs at 2014 levels of consumption for nearly 70 years.

“This study reinforces the fact that Canada has a very large natural gas resource base at its disposal, and Canadians will be well supplied with natural gas for as long as they need it,” NEB Chairman and CEO Peter Watson said. “Studies like this one also enable all governments to be better informed when building policy around resource development and energy markets.”

In British Columbia, where most of the resource is located, Chevron Canada and Australia’s Woodside Petroleum have teamed on a project to develop gas, mostly from the Liard Basin, and liquefy it at a terminal planned for the Kitimat, B.C., area.

The NEB said existing pipeline infrastructure associated with the Liard basin means the long-term prospects are good for shale development. “This certainty makes our province an attractive location for investors which means long-term economic activity and jobs for British Columbians for years to come,” Rich Coleman, the gas development minister for British Columbia, said in a statement.

However, developing these resources might not be on the books right now.

Mike Johnson, technical leader of hydrocrabon resources with the National Energy Board explains that it’s likely that only 219 TCF of that 848 TCF in-place resource will be accessible.

“We’ve always known the gas is there. The difficulty has been extracting it,” Johnson told the Alaska Highway News. “Even with today’s technology you can really only get about 20 per cent of the gas out of the rock and so when you end up with an in-place number of something like 800 TCF, you can really only extract about 200 TCF out of it.”

Johnson said the study will likely draw attention to the area from natural gas developers.

“It provides a baseline,” he said, “so that if an explorer was looking for somewhere to move they have a bit more information to go on rather than it just being a black hole where there is not any geological information. (…) By having a study like this it shows that there is lots of natural gas supply available,” Johnson added.

“It makes our job easier when we end up examining applications to export gas. We know the conditions of the market, we know Canadians are well supplied so it makes the ability to determine exports that are surplus to Canadian requirement a lot easier.”

Drilling in the basin has been traditionally lower than in other regions.

“There is really only a handful of wells that are producing shale gas (there) right now,” Johnson said. “It’s just because it’s remote and it’s really still in the exploration phase.”

The rock-bottom gas prices also make investments unlikely, especially that Canada has historically relied on the U.S. for exports. With the prolific Marcellus and Utica formations just south of the border, there just isn’t much appetite for Canadian shale gas.

That leaves the Asian markets which, with no natural gas resources of their own, have traditionally been good buyers for gas exports. It is with these markets in mind that the Kitimat facility is being built. But Canada is not the only exporter who casts wistful looks at Asian markets and they will have to compete with other exporters, none the least, the U.S. Also, in terms of developing liquefaction facilities, port facilities and new pipelines to move the gas from the basin to the ocean, other countries such as the U.S. and Australia are years ahead of Canada.

“Canada’s opportunity is really to position for the next wave of LNG need and interest,” Mary Hemmingsen, partner at KPMG told BC Business Canada, “and I think there’s widespread concensus that that’s in the mid-2020s. These projects take a number of years in predevelopment in terms of approval and five to six years in construction. So that puts us in that time frame. It’s not if, but when.”

Another hurdle are environmental concerns relating to shale exploration. Canada’s energy plans have been opposed by First Nations that are concerned the development of oil, gas and associated infrastructure may harm the ecosystems upon which they depend.

“The evidence is mounting of the peril of fracking,” said Lois Little with the N.W.T. chapter of the Council of Canadians. “Our water systems are connected. We are part of that landscape.”

Two Canadian shale gas basins rank among the 20 largest marketable reserves in the world. The Montney ranks third, while the Liard ranks ninth.

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