Gas from coalbed methane and shales made a big impact in the U.S., reversing a downward spiral in production and sending gas prices into a supply plunge. Canada repeated the production-price offset and the rest of the world is reaching for unconventional gas to meet rising world demand.

According to the IHS Global Insight report, “The unconventional oil and gas revolution is creating a new energy future for America. It is unlocking vast resources to meet U.S. energy requirements and ensure less dependence on foreign energy imports.”

Unconventional resources have the potential to enhance employment and government revenues throughout the world.

This profile features the key plays and players in Canada.

The Plays

Bakken

According to Continental Resources Inc., the Bakken shale oil play is a “continuous oil field of unprecedented magnitude.” It covers 38,850 sq km (15,000 sq miles) and 87% of that area has proven productive with 33,670 sq km (13,000 sq miles) under development and 202 drilling rigs at work in late 2012.

As a bonus, the Three Forks Formation underlying the Bakken increased original oil in place by 57% to 903 Bbbl in 2012 with an estimated 32 Bbbl recoverable, assuming a 3.5% recovery rate. That single activity gave North Dakota the lowest unemployment rate of any state in the nation.

The numbers are rising with development, down- spacing, and production efficiency. In 2010, the industry calculated only 557 Bbbl in place with 20 Bbbl recoverable at a 3.5% rate.

In that year, operators looked primarily at the Middle Bakken and Three Forks 1 zones. Now, they have added the Upper Bakken and Three Forks 4.

Pad drilling boosted profits. For Continental, six single wells cost US $29.3 million from spud to rig release in an average 201 days. A six-well pad cost $21.8 million to drill in 128 days.

According to the North Dakota Industrial Commission, Bakken production reached a record 635,127 b/d of oil in August 2012 from 4,458 wells, up from 379,371 b/d of oil from 2,749 wells in the same month a year earlier.

About the Bakken in Canada, PetroBakken Energy Ltd. said, “PetroBakken is currently the second-largest landowner in Saskatchewan’s Bakken play, a play characterized as a significant light oil hydrocarbon accumulation. Our widespread acreage position in the Bakken, combined with low production expenses and a visionary royalty regime in Saskatchewan, has provided us with a foundation for continued success in this play.”

Utica

Following its US $2.3 billion joint venture agreement that brought Total into the Utica play, then-Chesapeake Energy Corp. CEO Aubrey McClendon said in a press release, “We are pleased to extend our existing relationship with Total as a [joint venture] partner in the Barnett Shale to now include the Utica shale. We believe that the Utica shale is a world-class asset with world-class returns and now we have a world-class partner to help develop the play more aggressively than we could have with our own resources.”

“To date, horizontal drilling results in the Utica have been very encouraging, with activity so far focused on targets within the wet gas window,” said Andrew Byrne, director of energy equity research at IHS, in a recent IHS report. “Approximately two-thirds of the horizontal wells drilled on the play have reported 24-hour initial production rates of 1,000 boe per day or more, which supports our opinion that early results are encouraging. However, the Utica is still in the very early stages of exploration – only in late 2010 did the industry start moving from drilling vertical exploratory wells in the play to permitting horizontal wells.”

Chevron Corp. thought enough of the Marcellus and Utica plays that acquired Atlas Energy for $4.5 billion to get a stake in those properties. It later added more land in both plays.

Following the pioneering Encana Corp. well to the Utica/Collingwood in Michigan in 2010, the state offered leases on state-owned land. Sales at that auction reached more than $178 million, or an average of more than $1,500 an acre and seven times the previous record for a state lease sale, according to the Detroit Free Press. The high bid was more than $5,500 an acre.

Montney

Encana Corp.’s position in the Montney play was good enough that Mitsubishi bought into its Cutbank Ridge project for a 40% interest. “This brings a world-class partnership to a world-class asset,” said Mike McCallister, Encana executive vice-president and acting vice-president of the company’s Canadian division, in a Vancouver press conference. That is important for the Calgary company, since, as a partner in the Kitimat LNG plant proposed for exports to eastern Asian countries, it needs to hasten development of its gas assets.

A Raymond James report on the Canadian energy sector said, “The Montney resource is potentially one of the largest economically viable resource plays in North America. The various third-party estimates put the resources size between 50 and 700 Tcf of natural gas in place.”

Celtic Exploration Ltd., one of the largest operators in the Montney play, attracted enough attention that Exxon Mobil Corp. launched a friendly takeover bid for the company in mid-October 2012.

For the same reason, Petronas attempted a friendly takeover of Progress Energy Resources Ltd., but the Canadian government blocked the acquisition. The two companies were trying to overcome government objections in late November 2012.

Mitsubishi bought a 20% share of Royal Dutch Shell Plc’s Groundbirch Montney development. Shell owns a 40% interest in the LNG Canada project to export LNG from the Canadian west coast, and Groundbirch will be a major supplier for that project. Mitsubishi also holds a 20% share of that project along with Korea Gas Corp. and PetroChina.

Cardium

PetroBakken Resources Ltd. described its Cardium position on its website, saying, “After gaining some valuable knowledge and experience from working in the Bakken, we began targeting the Cardium as our second major platform for business growth. Based on extensive geological mapping, we identified that the Cardium would be best produced using horizontal, multistage fractured wells. We are now the most active driller of horizontal Cardium oil wells and going forward, we intend to direct considerable investments to the Cardium area. We will continue to build this light oil resource play into a substantial and growing production base.”

Apparently other operators see the potential of the Cardium, as well. According to Penn West Exploration Inc. the Cardium produced 70 Mboe/d from 1,000 wells at year-end 2011 and the company expected the industry to produce 120 Mboe/d from 3,000 wells by year-end 2012.

Devon Energy Corp., one of the largest producers in the Deep Basin of Alberta, illustrated the depth of drilling targets and the drawbacks in the area.

It said on its website, “We have used our large proprietary [2-D and 3-D] seismic databases to build an extensive inventory of deep to mid-range drilling targets in this area. Most recently, we have been testing light oil targets in the Cardium formation and liquids-rich opportunities in the lower Cretaceous zones, including the Cadomin. The region has winter-only access restrictions in many areas, but offers year-round access in others.”

Horn River Basin

Devon Energy Corp.’s future growth includes exploration and development opportunities in Canada’s most important energy-producing areas, including the Athabasca oil sands and the emerging shale gas play in the Horn River Basin of northeast British Columbia and emerging oil and liquids-rich plays in the Deep Basin and other areas in Central Alberta and Saskatchewan.

Apache Corp. has enough confidence in the Horn River Basin that it has given it a priority position as the gas source for the Kitimat LNG plant, designed to export Canadian gas production to the Far East. Apache, as operator with a 40% interest, expects Kitimat to produce a net 51.7 Mboe/d from the first train when it begins operating in 2017. Its partners are EOG Resources and Encana Corp.

The Players

Apache Corp.

Western Canada Sedimentary Basin: Montney, 1.28 million net acres; Western Canada Sedimentary Basin: Cardium, Unknown acreage; Liard Basin: Besa, 430,000 net acres; Horn River Basin: Muskwa, Evie, 200,000 net acres

Apache holds 7.5 million gross acres in British Columbia, Alberta, and Saskatchewan, and the company has worked in Canada since 1995. These Canadian properties include strong positions in the Montney and Horn River shales; the Viking and Cardium formations; and a new bright spot, the Besa shale in the Liard Basin.

The company’s D 34 K horizontal Besa shale well in the Liard Basin tested 21 MMcf/d of gas over a 30-day test period and produced 3.1 Bcf during a year online. Apache has estimated its recoverable gas in the play at 48 Tcf, and the company has planned a 61-pad development program with 13 wells per pad and 731 drilling locations at a total development cost of more than US $25 billion.

That development may wait on completion of the Apache-operated Kitimat LNG plant for gas exports to markets with higher prices. Partners are EOG Resources and Encana.

The Kitimat operation also will fuel development of the company’s 200,000 net acres in the Horn River Basin and its Cadomin conglomerates and sands in the Noel area of British Columbia.

In its Alberta Kaybob project, Apache is developing the Montney and Bluesky formations. The company’s West 5 area offers potential from the Cardium and Viking formations.

Apache enhanced its Canadian operations in late 2010 when it bought nearly all of BP’s upstream operations in Western Canada, including some 1.28 million net mineral and lease acres with access to Montney, Cardomin, and Doig production.

The company also proposed the Mist Mountain Coalbed Gas project to evaluate gas production from Crowsnest Coal Field in British Columbia. That appraisal will take three to five years over an area of 80,275 acres.

Celtic Exploration Ltd.

Western Canada Sedimentary Basin: Montney, 545,000 net acres.

Celtic Exploration Ltd. has gathered a strong position on both the oil and gas sides of the Montney play in western Alberta. That position was strong enough that Exxon Mobil Corp. made a bid in mid-October 2012 to buy the company for US $2.14 billion (C$3.1 billion), including debt.

The largest segment of its Montney inventory lies in the Resthaven area where it has 458,880 net acres. Celtic drilled 25 wells in the area, according to a September 2012 presentation. The company had 50.88 Mboe in proved and probable reserves in the Resthaven area at year-end 2011, up from 3.59 Mboe a year earlier.

The company counted on a 17% internal rate of return for production, with 82% gas in the south area to 70% in the north Kakwa area and a 78% oil cut.

Celtic holds an inventory of 2,204 gas wells in the south section, 212 gas wells in the north area, and 112 gas wells in the central area. It also has an inventory of 160 oil wells in the Kakwa/Karr area, 238 oil wells in the Lator area, and 32 oil wells in the Simonette area.

The company controls another 17,440 net acres with Montney potential in the Fir area and 78,486 net acres in the Kaybob area. Three wells were planned for the Fir area in 2012.

In addition to the Montney potential, Celtic holds 104,914 net acres in the Kaybob area that have potential for Duvernay production. So far, the company has drilled six vertical and eight horizontal wells in the Duvernay Formation.

Duvernay proved and probable reserves climbed to 1.1 MMboe at year-end 2011, up from 558 Mboe the previous year. The Duvernay property offered a 65% internal rate of return with a 53% gas cut.

Celtic also had 3.84 MMboe in proved and probable reserves at its Doig shale properties in the Inga area of British Columbia.

China National Petroleum Corp./PetroChina Co. Ltd.

Western Canada Sedimentary Basin: Montney, 450,000 gross acres.

China National Petroleum Corp. (CNPC) and subsidiary PetroChina Co. Ltd. may be China’s biggest oil and gas company, but the companies have expanded operations into shale in Canada and coalbed methane (CBM) in Australia.

In Canada, CNPC acquired a 20% interest in Shell’s Groundbirch Montney Field, a big part of Shell’s 450,000 gross acres in that county. Mitsubishi Corp. holds another 20%. Those three companies and Korea Gas Corp. also teamed up for LNG Canada, a proposed LNG plant planned for Kitimat on the West Coast of British Columbia. The plant initially will include two LNG processing trains with a capacity of 6 million tons of LNG a year. It also has the potential to double that capacity.

Chinook Energy Inc.

Western Canada Sedimentary Basin: Montney, 200,000 undeveloped net acres.

Chinook Energy Inc. works a large land position in tight sands and shales, with the bulk of its production in Canada.

Its capital program in Western Canada targets Dunvegan and Montney oil zones with horizontal wells, and 90% of its capex for 2012 were directed at conventional production with resource play potential.

Canada has delivered up to 85% of the company’s current production, or 5,500 net boe/d. The company has divided its properties among 200 sections in the Montney with more than a 50% working interest, 70 sections in the Dunvegan with four horizontal wells drilled by the time of a September 2012 presentation, and 210 sections in the Nordegg with more than a 50% working interest.

Chinook also planned to drill eight to 10 wells in 2012, including one or two vertical or horizontal Montney wells. The company will continue to evaluate its Montney, Dunvegan, Nordegg, Duvernay, and Nikanassin resources.

ConocoPhillips Co.

Western Canada Sedimentary Basin: Cardium, 137,000 net acres; Western Canada Sedimentary Basin: Montney, Horn River, 363,000 net acres.

ConocoPhillips Co. is a huge organization that takes on huge projects, including world shale and coalbed methane (CBM) resources as part of its plan for continued growth.

In addition to its heavy oil projects in Canada, the company is the largest landholder in the Deep Basin with 1.6 million net acres that include conventional production as well as shale production.

Among the shale plays, ConocoPhillips controls 812,000 net acres of land that cover Montney and Duvernay shales and the Cardium Formation in Alberta and British Columbia; the Muskwa shale in the Horn River Basin in northeastern British Columbia; and the Canol shale in the Mackenzie Valley.

Crescent Point Energy Corp.

Williston Basin: Bakken, 271,700 net acres.

Crescent Point Energy Corp., the largest operator in the Bakken play in Canada, is expanding its operations, both in the Bakken and into the Viking play in western Alberta.

After a series of acquisitions, the company has the biggest acreage position in Viewfield Field in Saskatchewan, the biggest Bakken field in Canada. Subsequently, the company added Bakken properties in Manitoba as well as the Viking properties.

Crescent Point counted 238.7 MMboe in proved and probable resource at Viewfield, not counting potential additions from a waterflood project in the field. The company produced 275 boe/d from the field in 2001, but that number increased to 75.6 Mboe/d by year-end 2011. Crescent Point estimated a 394% rate of return from its wells under primary production.

Under secondary production, it planned to complete 40 water-injection wells in 2012. Crescent Point said the waterflood should raise recoveries from 19% of the original oil in place under primary production to 30% with secondary recovery.

A third of the company’s capital expenditures went into Viewfield in 2012, enough money to support the drilling of 154 net wells.

In addition to that conventional Bakken installation, it drilled one net well in the Alberta Bakken shale play.

The Viking potential came from the company’s acquisition of Cutpick Energy Inc. (83 net sections of land with Viking potential).

Devon Energy Corp.

Western Canada Sedimentary Basin: Cardium, 507,416 net acres; Western Canada Sedimentary Basin: Montney, unknown acreage; Horn River Basin: Muskwa, Evie, 175,000 net acres.

Devon Energy Corp. produced 679 Mboe/d from 3 Bbbl equivalent in proved reserves from its properties in the U.S. and Canada, and the company counts unconventional resources as a growing part of its assets.

The Cardium in Canada is one of those growth areas. Devon holds 507,416 net acres in Alberta’s Deep Basin and the Ferrier area with Cardium potential. Much of the land is held by production from the company’s 1,283 wells.

According to Devon’s website, the company recently began testing for Cardium light oil. It also has Montney production potential in the Normandville area of west-central Canada.

Devon holds 887,250 net acres in southern Alberta and Saskatchewan with Viking potential, particularly in the Kindersley area of Saskatchewan. It cites between 1,000 and 2,000 potential drilling locations in the area.

The company controls another 175,000 net acres of land with some 1,500 drilling locations and 7 Tcfe of net risked resource in the Horn River Basin of British Columbia.

Encana Corp.

Western Canada Sedimentary Basin: Montney, 1.25 million gross acres; Western Canada Sedimentary Basin: Cardium, 383,000 net acres; Horn River Basin: Muskwa, Otter Park, Evie, 288,000 net acres.

Encana Corp., one of Canada’s biggest producers, chose some of the best unconventional plays in North America to impact its corporate growth.

These include 819,000 gross acres with Montney and Doig potential at Cutbank Ridge on the border of Alberta and British Columbia. The company has Montney rights under 724,000 acres. Mitsubishi holds a 40% interest in 409,000 net acres in those properties. The company planned 70 gross wells in 2012 from its 4,500-well inventory. The Montney produces from Saturn, Swan, and Cutbank fields in the area, while the Doig produces in the Steeprock area.

Encana drilled 55 net wells at Cutbank Ridge in 2011 and produced 548 MMcfe/d of gas.

The company also held 435,000 net acres in the Peace River Arch area with Montney access, where it planned to drill 27 wells in 2012.

Encana controlled 383,000 net acres in the Cardium play at its Bighorn property. The acreage also has potential for Wilrich production. The company planned to drill 33 Cardium wells in 2012.

Additionally, the company had 400,000 net acres prospective for the Duvernay – more than half of the liquids-rich fairway. Encana estimated 30 Tcf of gas and 4 Bbbl of oil in place on the property. The company has 1,000 to 1,600 net well locations and planned to drill 12 Duvernay wells in 2012.

Encana lists 1.55 million net acres in its Greater Sierra area, which includes the Jean-Marie formation development and 288,000 net acres in the Muskwa, Otter Park, and Evie shales in the Horn River Basin. These shales are up to 152-m (500-ft) thick in the company’s focus area. Encana drilled 112 gross wells in the Greater Sierra area, 70 of which came online.

Coalbed methane from the Horseshoe Canyon Formation provided Encana with 475 MMcf/d of gas in 2011. The company holds 4.59 million net acres with 10,595 wells in central Alberta of which 569 wells were drilled in 2011.

EOG Resources Inc.

Horn River: Muskwa, Evie, 157,500 acres.

In Canada, EOG holds 157,500 net acres of leases in the Horn River Basin. Although low natural gas prices in the U.S. and Canada have stifled gas drilling activities in North America, EOG signed on as a partner with Encana and Apache Corp. in the Apache-operated Kitimat LNG project.

Under that program, the companies are building an LNG plant in Kitimat, British Columbia, as a means to deliver gas at higher prices to foreign markets.

Exxon Mobil Corp.

Horn River Basin: Muskwa, Evie, Otter Park, 341,000 gross acres; Western Canada Sedimentary Basin: Cardium, unknown acreage.

Exxon Mobil’s Canada properties include a half interest, with its Canadian subsidiary Imperial Oil holding the other half, in 341,000 gross acres in the Horn River Basin shale play in northeastern British Columbia, making them the largest acreage holders in that basin.

They started a pilot program in 2011 and planned to start infrastructure construction late in 2012.

The company also holds Cardium acreage in the Harmattan area of Alberta, but that stake was diminished after Exxon Mobil signed a $3.2 billion deal with OAO Rosneft giving Exxon Mobil rights to explore onshore shale resources and offshore conventional resources in Russia.

Junex Inc.

St. Lawrence Lowlands: Utica/Lorraine, 1.06 million net acres.

Junex Inc. concentrates its activity in southern Quebec with substantial properties prospective for the Utica and Lorraine gas shales in the St. Lawrence Lowlands and the Macasty oil shale in Anticosti Island.

Overall, the company has 1.44 million net acres under exploration license in the St. Lawrence Lowlands, but some of those properties offer conventional production. A Netherland Sewell and Associates report showed 3.7 Tcf of net recoverable natural gas resources on the 1.06 million acres of Utica/Lorraine properties from a total of 53.92 Tcf of gas in place.

The Quebec government stifled fracturing operations in the Utica shale pending the promulgation of regulations. That process is scheduled for completion in June 2014.

Meanwhile, Junex is concentrating its efforts on its 233,275 net acres on five exploration licenses along the south side of Anticosti Island in Quebec.

Among prospective producing zones are the Utica-equivalent Macasty shale and dolomite and sandstone zones with a total estimated 12.2 Bbbl of oil in place.

Penn West Exploration Ltd.

Western Canada Sedimentary Basin: Cardium, 665,000 net acres.

Penn West Exploration targets the Cardium as its unconventional sweet spot in the Western Canada Sedimentary Basin, but it also holds positions in the Viking and Duvernay formations and a major gas shale play waiting in the wings in the Cordova Embayment.

The company planned to direct 20% to 25% of its development capital, or US $254.9 million to $305.9 million, toward its Cardium properties in Alberta in 2012. Its 665,000 net acres represent approximately 40% of the land in the Cardium trend.

Penn West budgeted that money to keep five rigs running in the play with a focus on its West Pembina, Alder Flats, and Willesden Green assets. The company planned to drill 100 to 150 wells during the year. It also wanted to finish the year producing 120 Mb/d of light oil from the Cardium.

The company controls more than 100,000 net acres in the Duvernay shale at Willesden Green. It completed one vertical well in the formation in 2012 and is expected to drill more wells targeting the Duvernay in 2013. Penn West is concentrating on the liquids-rich fairway.

According to an October 2012 presentation, Penn West has devoted 15% of its development capital to the Viking light oil play in Saskatchewan. Those funds should give the company 75 to 100 wells on its 750,000 net acres. The company produces from the Kerrobert and Dodsland area, but it also holds property in the Esther area of Alberta and Saskatchewan and expanded appraisal activity in that area in 2012.

Penn West budgeted $127,500 to $178,500 to develop the play in 2012.

The company also has 120,000 gross acres in the Cordova Embayment in northeastern British Columbia. Mitsubishi farmed in to that play in 2010 with a 50% interest for $250 million ($237 million at the time).

Five Japanese utilities later bought into the Mitsubishi share of the play.

Penn West planned to drilled 20 to 25 wells on multiwell pads and completed 10 to 15 of those wells in 2012, but the wells are not expected to come onstream until late 2012 or early 2013. At current gas prices, the companies are in no hurry. The project has approximately $1.02 billion in funding arranged.

When the companies signed the agreement, they wanted to produce 500 MMcf/d of gas by 2014, but, with Japanese companies joining the project, the major production effort probably will not come into play until at least one of the major LNG plants are completed on the west coast of British Columbia.

Petrobakken Energy Ltd.

Western Canada Sedimentary Basin: Bakken, 256,000 net acres; Western Canada Sedimentary Basin: Cardium, 172,800 net acres; Western Canada Sedimentary Basin: Montney, 121,600 net acres; Horn River Basin: Muskwa, Evie, unknown acreage.

Petrobakken Energy Ltd. has built itself into a strong position in the Bakken play in Saskatchewan and in the Cardium play in central Alberta. The company also holds acreage in the Montney and Horn River areas.

PetroBakken controls the second-largest acreage status in the Bakken light oil play and applied innovating techniques to improve recoveries.

The company claims more than 700 net development locations with only 256 of these booked at year-end 2011, and it operates its own gathering systems and hydrocarbon processing plants.

After developing its acreage first with short laterals and later with longer laterals and more fracture stages, the company evolved into dual laterals with the second lateral branching of the first lateral and extending parallel to the initial lateral. PetroBakken conducts 15-fracture stages in each leg. The company also initiated a gas flood to improve recoveries.

According to an October 2012 presentation, PetroBakken produced a net 19.22 Mb/d and a net 8.8 MMcf/d with 882 producing wells and 670 wells tied in to processing facilities.

The company’s Cardium properties are in central Alberta where it is one of the most active drillers of horizontal wells in the play.

With no booked reserves in the Cardium at the beginning of 2010, the company finished 2011 with 72.2 MMboe in proved and probable reserves and production of 16.5 Mboe/d.

Some 60% of its Cardium acreage is in the West Pembina area, 25% in East Pembina, and 15% at Garrington and Lochend.

The company brought 52 net wells on production in 3Q 2012 and had another 23 wells in the Cardium and 17 wells in the Bakken awaiting completion or completed and awaiting hookup.

PetroBakken had 20 drilling rigs at work in the quarter, including nine in the Cardium and eight in the Bakken, two on conventional prospects in southeastern Saskatchewan, and one in a new resource play in central Alberta.

It is evaluating the Nordegg, Montney, Duvernay, and Swan Hills formations with four wells planned in 2012 as a follow up to its first four wells in 2011.

PetroBakken holds additional properties with 200 well locations and production potential from the Montney in northeastern British Columbia and the Muskwa and Evie shales in the Horn River Basin.

Progress Energy Resources Corp.

Western Canada Sedimentary Basin: Montney, 820,000 net acres.

Progress Energy Resources Corp. has established a strong enough position in the Montney play in British Columbia and Alberta that at least one international company targeted it for acquisition.

Shareholders approved the acquisition of the company by Malaysia state oil company Petronas through its Petronas Carigali Canada subsidiary. The Canadian government, however, rejected the US $5.4 billion takeover bid. In late October 2012, Progress and Petronas were trying to figure out how to overcome the government’s objections.

Some 820,000 net acres of the company’s 1.3 million net acres in British Columbia and Alberta lie in the Montney trend. Production reached 50,000 boe/d in 2012, and the company planned to double that number in five years. It calculated 1.1 Tcfe of gas in booked reserves from its property.

Petronas and Progress previously formed a joint venture. Progress held 700,000 gross acres on Montney-prospective land in the northeast British Columbia Foothills area, and it dedicated 149,910 of those gross acres to the joint venture. The partners also planned to build an LNG export operation on British Columbia’s West Coast where two other groups of operators also plan LNG plants. Petronas will own 80% of the LNG side of the venture. That proposal still is in the feasibility study phase.

The North Montney 50/50 gas development venture with Petronas includes the company’s Altares, Lily, and Kahta properties. Petronas is paying $1.09 billion in up-front cash and development carries for its share of the venture.

Progress also has a plan for its Montney play. The company will develop the play in pods that feed a centralized 50 MMcf/d gas processing plant It has identified six pod areas ready for commercial development.

The company will develop those pods in four stages: a test phase with one vertical and one horizontal well, a pilot phase with two to four additional horizontal wells to prove costs and production, a full development phase with 15 to 20 more horizontal wells to bring production to 50 MMcfe/d of gas, and a maintenance phase to produce the pod for 10 years.

A typical pod would cost $145 million and require 23 wells.

In addition to the British Columbia properties, Progress holds 300,000 net acres in the Deep Basin in Alberta and additional properties in the foothills.

Town South is the most mature Montney development in the Progress inventory. That Foothills property, including gas from Gundy, produces 50 MMcf/d of gas and sends it to the company’s 50 MMcf/d gas processing plant.

Quicksilver Resources Inc.

Horn River Basin: Muskwa, Klua, Evie, 130,000 acres.

Quicksilver Resources Inc. built its reputation on unconventional plays, both in coalbed methane (CBM) and in shales, and most of its current activity revolves around those plays.

The company holds about 130,000 acres in the Horn River Basin where it booked 99 Bcfe in gas reserves at year-end 2011.

By September 2012, Quicksilver had four wells on production, three of those producing a combined 73 MMcf/d of gas. Individual wells produced at rates between 23 MMcf/d and 34 MMcf/d of gas. It has estimated 10 Tcf of gas resource potential.

The company found higher rates on newer wells as it increased lateral lengths in its horizontal wells to 2,255 m (7,400 ft) from the 1,280-m (4,200-ft) lengths of earlier wells.

The company also completed its first eight-well drilling pad in 2012 and expected to produce more than 150 MMcf/d of gas from that pad at full capacity.

Quicksilver formed a 50/50 partnership with KKR on the Horn River properties in December 2011, and the companies planned to build a 150 MMcf/d gas processing plant for US $120 million, probably in 2014 with the arrival of new pipeline capacity.

The company also holds 250 MMcfe of proven gas reserves in Horseshoe Canyon CBM in south-central Alberta at year-end 2011.

In the US, the company held 140,000 net acres and 2.5 Tcfe of proven gas reserves in the Barnett shale and 260,000 net acres of land prospective for Niobrara shale in the Sand Wash Basin in northwestern Colorado and southern Wyoming.

Royal Dutch Shell Plc

Western Canada Sedimentary Basin: Montney, 450,000 gross acres; Maverick Basin: Eagle Ford-Pearsall, 250,000 net acres.

Royal Dutch Shell planned to spend U.S. $6 billion on its oil shale operations across the globe in 2012, and only about half of that capex will go into its North American operations.

Shell’s Canadian operation is concentrated largely in the Groundbirch Montney project in British Columbia, where the company has more than 300 wells, five natural gas plants, and 559 miles of gathering system. The company produced some 170 MMcfe/d of gas in mid-2012, and the field has the potential to produce 12 Tcfe of gas.

Sasol Ltd.

Western Canada Sedimentary Basin: Montney, 51,000 gross acres.

Sasol Ltd., best known for its pioneering work in coal-to-liquids production, spread its activities in to the South African and Canadian unconventional resources.

The company entered the Canadian segment of the industry with a U.S. $1.07 billion acquisition of half of Talisman Energy’s gas shale assets in British Columbia.

Not only is the company examining the feasibility of Canada’s first gas-to-liquids plant, but it is acquiring gas from shale to supply the possible 48,000 b/d or 96,000 b/d plant. A 96,000 b/d plant would need 1 Bcf/d of gas.

The properties in the deal cover more than 51,000 gross acres with up to 9.6 Tcf of contingent gas resources in the Montney shale at Farrell Creek.

Sinopec Corp.

Western Canada Sedimentary Basin: Cardium, Montney, up to 717,443 net acres.

Sinopec Corp., or China Petroleum & Chemical Corp., China’s second largest oil and gas producer, holds huge volumes of properties that include exploration licenses for 297 zones covering 238.8 million acres and mining licenses on 192 covering 5 million acres.

Unconventional resources figure heavily into the company’s future.

Sinopec expanded its operations into Canada in 2011 with the acquisition of Daylight Energy Ltd. for US $2.25 billion and renamed the company Sinopec Daylight Energy Ltd.

That company held 717,443 net acres of land in Alberta with properties in the Greater Pembina area and the Deep Basin.

In the Pembina area, its Brazeau property offered “significant development of the Cardium zone” in 2011, and the company expected to continue that development in 2012.

Also in the Pembina area, the Warburg properties east of Brazeau also featured Cardium development.

In the Deep Basin area, the company’s Peace River Arch properties produce primarily from Montney horizontal wells. In the same area the West Central properties focus activity on the Montney and Cardium.

Talisman Energy Inc.

Western Canada Sedimentary Basin: Cardium, 230,000 net acres; Western Canada Sedimentary Basin: Montney, 144,000 net acres; St. Lawrence Lowlands: Utica/Lorraine, 753,000 net acres.

Talisman Energy Inc. has long been a Canadian powerhouse, but the company has expanded its unconventional resource activities to other nations as well.

But the major share of Talisman’s activities still center on Canada. The Greater Edson area in the Deep Basin contains 230,000 net acres with Cardium potential. The company also holds potential Wilrich production on 150,000 net acres and 15,000 net acres in the conventional area of the Montney play. The area covers some 700,000 net acres with 1,900 drilling locations and 880 MMboe in unrisked prospective resource.

Talisman’s Montney shale properties in British Columbia cover 144,000 net acres in the top-tier area, with appraisal and development continuing at Farrell Creek and Greater Cypress.

The company signed an agreement with South Africa’s Sasol in 2011 to develop the Farrell Creek area with a half working interest. Two months later, Sasol took another half interest in Talisman’s Cypress A Montney property. The companies also started a feasibility study that could lead to a gas-to-liquids plant in Western Canada.

The company’s Montney and other formations offer Talisman 19 Tcfe in contingent resources. In late 2012, the company still had 5,700 Montney locations available to drill.

Talisman had Duvernay assets in the same area and planned 12 wells in 2012 on its 357,000 net acres.

The company also is one of the largest landholders in the Utica-Lorraine Shale play in the St. Lawrence Lowlands of Quebec with 753,000 net acres. Fracturing for development has been postponed in that area until the Quebec government establishes rules governing the process. Talisman suspended its operations there in 2011 pending these regulations.

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