As the U.S. shale revolution has grown it has simultaneously battered Canada’s energy industry in recent years, ending two decades of rapid expansion and job creation in the nation’s vast oil sands. Now a Canadian shale revolution is on the horizon and looking to repair the economic damage.
Canadian producers and global oil majors have started exploring the Duvernay and Montney formations, which they say could rival the most prolific U.S. shale fields.Together, the Duvernay and Montney formations in Canada hold resources estimated at 500 trillion cubic feet of natural gas, 20 billion barrels of natural gas liquids and 4.5 billion barrels of oil, according to the National Energy Board, a Canadian regulator.“The Montney is thought to have about half the recoverable resources of the whole oil sands region, so it’s formidable,” Marty Proctor, chief executive of Calgary-based Seven Generations Energy, told Reuters in an interview.
Conoco Phillips announced last week that it spent $120 million to acquire 35,000 net acres in the Montney shale play in British Columbia, bringing its net total to roughly 140,000 acres. Matt Fox, an exploration leader at Conoco said in a statement that the Canadian acreage supports the company’s “low cost of supply resource base without requiring significant near-term capital commitments.”
Conoco’s acquisition is in close proximity to acreage already owned by Calima Energy, an Australian company. “This transaction is significant as it underlines continued interest from major companies in the Montney play in Northeast British Columbia and provides a market price for undeveloped acreage in the vicinity of the Calima lands,” Calima Managing Director Alan Stein said.
Calima operates more then 70,000 acres in the Montney shale formation and has the permits needed to build, maintain and operate a road into its holdings. Advances in horizontal drilling and hydraulic fracturing have uncorked new opportunities as the Montney shale has one of the most competitive break-even costs in North America.
It appears exciting times are ahead for Canadian shale and U.S. majors should keep their eye on what appears to be the next shale frontier.