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Efforts to delineate North America’s most prolific gas reservoir are testing the operational creativity of the oil and gas industry in British Columbia’s northern Liard Basin, where Nexen Inc. has drilled four deep, high-temperature, high-pressure wells and completed two.
Nexen, which was acquired by CNOOC Ltd. in a $15.1 billion transaction in 2012, updated its Liard Basin foray at the 9th Unconventional Gas Technical Forum in Victoria, British Columbia, in mid-June.
One should use football-field lengths as the ruler to illustrate the 2,000-foot thickness of the Mississippian-aged Lower Besa River Shale, which comprises the major target, along with another thousand feet in the overlying Exshaw. Early estimates place the original resource in place at between 170 billion cubic feet (Bcf) and 500 Bcf per section. Think of the Haynesville times two when discussing Liard Basin productive potential.
News of big pay in the deep Liard dates to 2012, when Apache Corp. announced results from a medium-length horizontal well with six to eight fracture stimulation stages—one of four in the area—and shut in the discovery because of limited infrastructure and a volume of recoverable natural gas that would reduce North American pricing to pennies on the dollar.
Apache has since sold down its efforts, along with the proposed Kitimat LNG facility, to Chevron Inc. Others active in the Liard include Canada’s Paramount Resources Ltd.
Liard Basin gas is earmarked as feedstock for the Asian LNG trade if and when LNG facilities are constructed in British Columbia. Currently, the facility closest to fruition, Petronas’ Pacific Northwest LNG project, will source gas out of the Montney Shale and reach final investment decision in December 2015. Don’t expect Canadian LNG exports before 2019.
Nexen sourced specialized tools normally used in the deepwater Gulf to prospect its northern Liard Basin sortie. Logistics are stunning.
It took 265 days and $65 million to drill and complete the deepest northern Liard well at 5,700 meters. Completion efforts were restricted to a narrow 60-day winter regulatory window and consumed 55 days. Shallower southern Liard Basin wells can be drilled in 100 days, but there is no takeaway infrastructure for the gas.
In winter, access to the northern Liard comes via an ice bridge more than two-thirds of a mile across the Liard River or, during summer, by barge from the Northwest Territories, or by helicopter. If a load is too heavy, Nexen uses heavy lift helicopter services from coastal British Columbia that come with a quarter-million-dollar price tag, but provide no frequent flier mileage.
In 2014, Nexen commissioned a fit-for-purpose, 3,000 horsepower rig from Trinidad Drilling Ltd. under a five-year contract to prospect the Liard. The rig features hoist capacity of 1.25 million pounds to support the four strings of casing required for Liard wellbores, which begin as a 26-inch diameter spud and finish 17,000 feet lower as a 5.5-inch cased hole.
Along the way, it can take 30 days at a rate of one yard per hour to drill through 2,600 feet of the Mattson Formation, which chews up tri-cone drillbits the way tri-cone bits normally chew rock. At the bottom of the challenging wellbore, operators encounter downhole temperatures approaching 375 degrees Fahrenheit and an over-pressured reservoir that tests the limits of metallurgy, fluids, cement, and ceramic proppant beneath a 15,000-psi blowout preventer. Surface flare testing of wells—there is no takeaway infrastructure to consistently measure output—is ear-shattering.
Nexen stockpiles everything on site for the eight-month drilling venture in the northern Liard, including 30,000 barrels of diesel, casing, onsite bulk cement facilities, mud and other rig and completion supplies. More than 1.3 million gallons of heated water are stored onsite for fracture stimulation in a tank that later serves as a catchment for flowback water.
Nexen maintains a 24-hour hospital equivalent medical facility onsite should medical services be necessary in the remote landscape. Such logistics add $15 million to the well cost.
Not all Liard Basin wells fit the Nexen experience, where a combination of extraordinary factors makes drilling in the North Liard as quixotic as Jim Bob Moffett’s Davy Jones deep-shelf foray in the Gulf. Both efforts identified copious quantities of natural gas. Unlike Davy Jones, Nexen can physically get the gas out of the depths. The real challenge will be moving that gas to the Pacific Coast, and to Asia as LNG.
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