The quest to find and harness the cleanest, safest and most affordable energy sources remains a fluid competition, in which unconventional gas stands as a serious leading contender.
Nuclear energy was enjoying a resurgence in popularity in recent years because of its low emissions levels. That was until an earthquake and subsequent tsunami brought about a crisis at Japan’s Fukushima Daiichi nuclear complex.
In the wake of that incident, governments and energy industry experts are feeling a heightened sensitivity to the risks of nuclear power, and a renewed openness to alternatives. That will likely cast a new light on supplies of unconventional natural gas as a cleaner, safe and abundant energy supply.
Peter Tertzakian, Chief Energy Economist and Managing Director, ARC Financial Corp, has observed the rise in price of natural gas in Japan since the nuclear incident. “The ball is in Canada’s court to take advantage of this opportunity to sell our natural gas to the Asian markets,” he says.
In Canada, natural gas prices are between $3 and $4 US per million British thermal units (mmBTU) and oil hovers around $100 per barrel.
Renewed interest in gas
Although Canada is the world’s third largest producer of natural gas, this relatively clean and safe fuel has taken a back seat recently in drilling and production priorities. But that is beginning to change, as world oil markets react to turmoil in the Middle East, and the nuclear crisis in Japan casts a dark shadow over that energy source.
Enter natural gas, in its various forms:
- ‘Conventional gas’ is trapped under pressure in small porous zones within rock, usually sandstone, carbonates or siltstones. It is the easiest gas to extract and has been the staple of the industry for a century.
- ‘Unconventional gas’sources include tight gas, coal bed methane, shale gas and gas hydrates. Each is found in very different formations. In unconventional sources, gas molecules are attached to the carbon molecules by a process called adsorption. The gas adheres to the hydrocarbon material and extraction requires depressurizing the reservoir. Gas also occurs in tiny pores that are poorly connected, making the gas difficult to produce.
- ‘Tight gas’ is when the reservoir is in sandstone, similar to conventional gas, says Kevin Heffernan, Vice-President of the Canadian Society for Unconventional Gas (CSUG). “The difference is in the permeability, the ease with which the gas can flow through the rock. Low permeability is called tight sand. The gas has difficulty moving through the pores between the sand grains and extraction requires hydraulic fracturing.”
Shale steps forward
The recent buzz in the industry has been about shale gas, found in large amounts in B.C., Alberta, Saskatchewan, Quebec and the Maritimes. Advances in drilling technology, primarily horizontal drilling enable gas to be extracted from shale formations and old wells. It has resulted in a gas surplus and kept the price low.
While tight gas is found in slightly coarser material, shale gas is found in finely grained material that is more attractive to producers because there is more organic material that can generate a lot of hydrocarbons.
“Shale has the potential to hold more gas, even though it is in finer material and is thus harder to get out,” says Mike Dawson, President of CSUG. “There are small pore spaces but it can store a lot of gas because the gas molecule is very small.”
Shale gas is extracted with the help of a method known as hydraulic fracturing, which environmentalists and some landowners oppose because they fear it can contaminate ground water supplies.
Hydraulic fracturing is the process of transmitting pressure by fluid or gas to create cracks or open existing cracks in hydrocarbon bearing rocks underground. The highly regulated process varies depending upon the rock properties, the depth, thickness and temperature of the reservoir, and whether or not the well being drilled is vertical or horizontal. These variables determine the choice of fracturing fluids and materials, and the type of wellbore cement and casing which is used.
The fracturing process enables hydrocarbons to flow more easily through the cracks from the rock formation to the wellbore. Shale resources are typically thousands of metres below ground water, which is usually found 50-150 metres below the surface. Shale is typically found 1,500 metres below the surface. Industry experts say the fractures created at that depth do not naturally extend up to the surface or to the level of water tables.
Strict guidelines
“If you aren’t taking proper steps in the cementing process, you can have problems,” says Dawson. “But well construction guidelines are strict and if a well is constructed properly, then there should not be migration of gas to the higher levels.”
Hydraulic fracturing has been used in the industry for 60 years and more than one million fracturing operations have occurred in North America, says Heffernan.
In any industrial operation, there are accidents and risks, says Chris Severson-Baker, Managing Director of the Pembina Institute.
“There may be an increased risk to ground water in shale gas. There is always a risk in oil and gas drilling if you have a containment problem.”
Water is necessary in the hydraulic fracturing process and this is also of concern to environmentalists and landowners. The water is mixed with chemicals and sent down the well bore under great pressure. Each company has its own mixture of what it sends down the well bore and the formula also depends on the specific rock formation. The wastewater remaining after the gas has been retrieved contains contaminants from the rock formation, such as natural salts, heavy metals and, in places, minor amounts of hydrocarbon.
Another issue is how the water is handled once it is recovered, how spills and leakage are prevented and how the water is treated before it is discharged or reused. In Alberta, the recovered water from hydraulic fracturing cannot be disposed directly to the surface. It has to be treated, recycled or made safe to discharge.
“The major issues are the volume of water required, which affects the water table, and proper handling and disposal of waste water,” says Severson-Baker. In addition, a lot of energy is required in the actual process of hydraulic fracturing, and like conventional gas, shale gas can have very different C02 concentrations in different reservoirs and different places.
Coal bed methane
Coal bed methane is natural gas obtained by releasing the pressure on the coal so the methane that has been adsorbed to the coal molecules can escape. The methane is desorbed from the coal to travel to the wellbore and into the pipeline. If there is water in the coal seams, it is considered a “wet reservoir” and water is removed from the rock in order to obtain the gas. Alberta’s large Horseshoe Canyon formation has coal seams considered to be dry gas because the fractures contain methane rather than water.
Meanwhile, swirling in the industry’s crystal ball is an undeveloped resource known as “gas hydrates.”
“In gas hydrates, the gas is solid,” says Dawson. “Under unique temperature and pressure conditions, methane will change from a gas to a solid. In the Arctic permafrost, the gas has changed into a solid and is bound up with water. If you drill and change the pressure and temperature, you can create the conditions to turn the solid back into a gas.”
“There is an estimated 28,000 trillion cubic feet of hydrates which represents an enormous potential resource,” says Dawson.
Commercial development of gas hydrates will have to wait until the technology has been developed to extract them. There are a few geological organizations looking at developing the process, and currently, on the north slope of Alaska, Conoco and BP are planning a pilot project to develop gas hydrates.
Hunt for new techniques
Gas producers seek new technologies to reduce environmental impacts such as greenhouse emissions and their surface footprint by drilling multiple horizontal wells from one drilling pad. While there are greenhouse emissions upfront in the drilling process, surface activity ends once the well is drilled and the well can remain productive for decades.
“If you amortize the greenhouse gas emissions from the initial drilling phase over the life of the well, you would find it to be extremely low, less than one per cent,” says Kerry Guy, Manager of Natural Gas Advocacy for the Canadian Association of Petroleum Producers.
“There are no easy ways to address the energy needs of the world,” says Sid Dykstra, CEO of Cinch Energy, a junior oil and gas company. “Each energy source has its impacts. Is natural gas a cleaner burning fuel? Yes.”
With the price differential between oil and gas, Dykstra’s company is looking for oil as well as gas, but is still 90-per-cent gas. He believes the challenge for industry is to obtain energy sources with the lowest impact to the environment, and for consumers, the challenge is to use all sources of energy more wisely.
Meanwhile, selling Canadian natural gas to those Asian markets is dependant upon construction of an the Kitimat LNG export facility in Kitimat, BC, now in the design phase with Encana, EOG and Apache.
“That facility the linchpin right now,” adds Tertzakian. “If we don’t take advantage of the growth markets in Asia, other countries like Australia, Indonesia, and Russia will.”
