Thank you, Mr. Chairman and members of the committee.
My name is David Pryce. I'm vice-president of western Canada operations with the Canadian Association of Petroleum Producers. I appreciate the opportunity to talk with you today, and my apologies that I was not able to get down to Ottawa.
With me today I have Cam Cline, who's an engineer with 23 years of experience, and Marc Dubord, who's a hydrogeologist with 15 years of experience. They're representing the Canadian Society for Unconventional Gas and are here to provide assistance in answering any of the technical questions you may have.
I understand you have our slide deck with you. If you turn to the first slide, it will show the outline.
What I want to do is cover very briefly what natural gas from coal is and where it is in Alberta, then talk about typical operations we have in developing this resource. I also want to spend a little time talking about a stakeholder consultation process that has gone on in Alberta and about some of the issues and concerns and what's being done to address them, and then, finally, put this in the context of Canadian gas production.
It's a lengthy deck, so I will move quickly through it to meet the time constraints. If you have questions that I don't cover, you can catch us at the end of this.
On the next page, “Natural Gas from Coal in Alberta” is the title. Really, natural gas from coal is found across Canada. I want to focus on Alberta because that's where the industry activity is occurring at this time. The map shows the various horizons or zones where natural gas from coal—or coal-bed methane, as it is also known—can be found.
I want to focus on the three zones that are attracting industry interest at the moment. The first is the Horseshoe Canyon. It has about 66 trillion cubic feet of resource and is probably the largest play in the world right now. But it is in its infancy, as all of them are. Current production is around 600,000 cubic feet per day. That's where our focus is at the moment.
The second, the Mannville zone, is a huge resource, and it is at the point of trying to determine technically whether it can be produced on a commercial basis. It is associated with salty water typically.
The third zone is the Ardley zone, another large resource, which can be associated with either salt water or fresh water and in some cases is dry. This particular zone is sitting in abeyance for development, as we wait for rules to be developed on how we will deal with the fresh water that might be produced with it. So there's not a lot of activity in that particular horizon.
I think the bottom line is that there's a huge resource potential. It is in its infancy, and we are looking at ways to make this a commercial play.
The next slide—the next few slides, really—talk about the typical footprint we might have out on the landscape. This particular one is a drilling operation that is in effect. It is an operation that really is for coal-bed methane, or natural gas from coal. It has a much smaller footprint as we do these kinds of activities: smaller and fewer pieces of equipment and minimal surface disturbance is the typical way we do things. We don't necessarily strip off the vegetation and topsoil; we try to get in and out with minimal disturbance.
The next slide shows the next phase in activity. This is a well stimulation operation. This is where we inject, typically, nitrogen gas down the hole to try to enhance and flush the reservoir to better encourage production. As with the drilling operation, a minimal footprint objective is what we're trying to achieve.
In the next slide, titled “Well Construction”, what we're trying to convey is the engineering and regulatory measures that are in place to ensure that we separate our production zone from the upper water aquifers. What we are required to do by regulation is apply a surface casing and cement it in place and then a production casing and cement it in place. The intent of that, as I said, is to separate the producing zones from the upper aquifer zones.
If you move to the next slide, titled “Well Depths”, what we're trying to show is the vertical depiction of the different wells we deal with. On the left side is a typical residential or farm domestic well. That's usually completed in the 10- to 100-metre range. The next well is the dry “natural gas from coal” well typical of a Horseshoe Canyon well, subject to those well completion requirements I mentioned before. It is usually completed in the zone somewhere around 200 to 800 metres in depth to access those coal seams. Again, it's typically a dry well, with no fluids associated with it.
The next one is the Mannville well. It is deeper and typically associated with salt water.
The final well is a typical disposal well. The point of this last piece is to indicate that any salt water we produce we are required by regulation to inject downhole. When you look at the slide as a whole, we're trying to show that there is a significant vertical separation between the upper water aquifers, where domestic wells typically occur, and the producing zones we have.
The next two slides show the pipelining procedures. We install pipelines to get the gas to market. With coal-bed methane the pipelines are relatively small--six inches down to less than four inches. When it's around six inches we do a little bit of topsoil stripping to preserve and protect the topsoil. Then we plow the line in.
The next slide shows the plowed-in pipeline four inches or smaller. We're able to plow that right in without any topsoil disturbance. The goal overall is to minimize the footprint, minimize the disturbance, and protect the topsoil.
Next is the sound attenuating compressor. Noise is one of the issues that has been raised from time to time, and we have the technical capability to minimize that through sound attenuation control. We are subject to the rules of the Alberta Energy and Utilities Board and the National Energy Board, which set the standards or criteria around noise. Where it's needed and appropriate, we have the ability to apply sound attenuating equipment on compressors.
The next slide is on stakeholder consultation. This is not a new issue for the industry, nor is it a new opportunity in terms of a resource. It was developed several years in advance in the United States. We've been learning from that experience, but we also have our own experience in developing conventional oil and gas. With that experience comes the regulatory environment. Notwithstanding that, because it's a resource that's moving forward in Alberta, questions arise around how to develop it responsibly.
The Government of Alberta installed a MAC, or multi-stakeholder advisory committee, in 2003. It was led by the departments of energy and environment. As a stakeholder group they tried to identify the issues that might be of concern to folks to determine if the regulatory environment addressed them or if new measures were required.
Do we have confidence that the regulatory environment is adequate? Does it protect the water? Does it deal with the surface impacts that might be associated with natural gas from coal development, such as well density, the number of wells and their proximity together, the number of roads, the level of activity and noise, and the cumulative effects of those things? There are also questions around air quality, the overall pace of activity, and the effectiveness of the interrelationship or communication among industry, government, and the land owners.
Our view is that we have a pretty strong regulatory environment in place. It has been in place for decades, as a result of the evolution of the conventional aspect of the oil and gas industry. Coal-bed methane development is quite similar in its process to conventional development methods. So the regulatory environment deals with issues around well density or well spacing, flaring, noise, and how we protect downhole for the upper aquifers with the casing and cement methodologies. It deals with handling saline water or produced water and mechanisms whereby we're required to have consultations with the landowners.
In Alberta we have surface rights and subsurface rights, and we need to reconcile those rights. We have a Water Act in Alberta that's been in place for more than a decade. It provides controls for our industry, through permitting and licensing processes, as we look at ground water and surface water.
Having said that, the MAC process raised some questions and challenged whether there were things that could be done better. I'll talk to that in the next few slides.