Thank you, Mr. Chairman.
The goal of our presentation today is to provide you with a background, as you requested, on shale gas exploration and production in North America. We would like to give you an outline of the geoscience knowledge used to identify oil and gas potential, as well as a preliminary assessment of shale gas resources in Canada.
As you've probably heard abundantly over the last sessions here, shale gas has changed the North American energy market. You can look at the top diagram on page 3 at the NEB reference case as of July 2009, which now starts to include shale gas as part of their forecast and their scenarios going forward, which is new as of 2007--they were not including shale gas in these. As well, perhaps more strikingly, when you look at the North American natural gas supply, you can see that it peaked in 2000, after which the supply from the Gulf of Mexico had started declining, and from 2005 forward, it started moving up again due to the shale gas production in the U.S. In Canada, shale gas production is expected to have the same impact on the gas supply.
Production of shale gas in North America began in the United States some twenty years ago, in the Barnett shale.
Since 1990, nearly 12,000 wells have been drilled, and ultimate recoverable reserves are estimated at 30 tcf, or trillion cubic feet.
The most promising field in the U.S.A. is the Marcellus shale. It is very promising because the organic layer in that shale is very rich. Production there began in 2000, or 10 years ago, and 2000 wells have been drilled, with ultimate recoverable reserves in the Marcellus shale estimated at 49 tcf. To put that into context, North American demand for natural gas is approximately 25 tcf per year.
I'll turn to slide 5, the Canadian context. You've heard of the Horn River. Since 2006, this is the area that's being explored and is going into production. In terms of the potential resource that could be available, the Canadian Society for Unconventional Gas is estimating that approximately 500 tcf might be available from the Horn River Basin. As well, the Utica and Lorraine basins are now being looked at in Quebec and have a potential of 181 tcf. Shale gas potential exists in many other parts of the country as well, not just in these areas shown on the map--in Ontario, for example.
Again, putting these potential resources in context, the Canadian gas demand on a yearly basis as of 2008 was about 2.5 tcf.
Our role is to assess the geological context. The work done by the Geological Survey of Canada and Natural Resources Canada is published and funded by taxpayers. All the work conducted by the Geological Survey of Canada is published in scientific journals or publications produced by Natural Resources Canada.
The data and publications are used by the private sector, in the development of new exploration sites, and by the public sector, by regulatory officials and the provinces that own the resources.
Most shales currently being explored have been mapped or studied by the Geological Survey of Canada, which was founded in 1842.
Shales can be very different in terms of mineralogy. For example, the organic matter that actually determines its potential can vary, but there are also differences in silica and carbonate content that affect our ability to fracture the rock, in the case of natural gas production.
The key elements on this in the work that the Geological Survey does really have to do with the petroleum system and how you generate resources. To have a working petroleum system, you need sedimentary rock and you need several kilometres, typically, of sediment. You need a layer that's going to be very rich in organic material. That's the source rock, and it's typically clay and it becomes shale. So shales are the source rock for petroleum systems most of the time. Then you need to bury the system and expose it to some heat--we call it cooking--and you create petroleum from that. Eventually, you keep cooking it and you produce natural gas. If you keep cooking, well then everything is gone and it dissipates.
Eventually the oil and gas will migrate into a reservoir that is a structural trap. The structural traps are your conventional reservoirs. With the technology now, putting together the ability to fracture and to horizontally drill, you're able to go back to the source rock, which is the shale.
Slide 7 looks at the extent of the preliminary assessment of shale gas resources. The Geological Survey looked at what's available at the surface and also at the rocks, the drilling, and all the data that's available publicly, as well as the seismic records. In the typical cross-section, what you would look for is that source rock, which you see in red in the diagram on the left. That is the shale natural gas, and typically there's an impermeable layer on top that has trapped...left the natural gas where it is. These are obtained partly by the seismic profile, but then with analysis of the rocks and geochemical analysis to understand the system, its evolution with time, and then the potential of the rock itself.
In the second diagram--I think it's a diagram that's been shown already today--is your typical type of drilling, where you start vertically and then you go horizontally. Typically, in Canada the areas that are currently producing natural gas or where they're exploring for natural gas out of shales are several kilometres below the surface. Again, the context for groundwater is that groundwater is typically in the first few hundred metres, near the surface.
Slide 8 deals with the roles and responsibilities of the various governments and regulatory agencies. Regulation of onshore oil and gas drilling and production, including shale gas, falls primarily under provincial jurisdiction, as well as of the Yukon Territory. The federal regulatory role is limited to territories onshore and offshore, through the offshore boards, and, in the Northwestern Territories and Nunavut, through the National Energy Board.
The department of Natural Resources Canada, through the Geological Survey of Canada, plays a key role in understanding natural resource potential through its geoscience and geomapping programs.
Slide 9 is the last slide.
In the roles of responsibility of the federal government, other federal departments can be involved in the shale gas development, principally, Environment Canada, through their administration and enforcement of certain provisions of the Species at Risk Act or the Migratory Birds Convention Act; Environment and Health Canada, through the Canadian Environmental Protection Act and the chemicals management plan; Fisheries and Oceans, under the Fisheries Act, for the protection of fish and fish habitat; and finally, Indian and Northern Affairs Canada, through their responsibilities relating to oil and gas and their issuance of rights in the territories but not onshore Yukon.
Thank you, Mr. Chair.
