Significant’ shale gas find declared in Liard Basin

July 29, 2013

A “very significant” discovery of shale gas in the Liard Basin of the Northwest Territories holds promise for Calgary company Lone Pine Resources to carry out hydraulic fracturing, or “fracking,” on 100 per cent of its 52,000-acre stake in the area.

The National Energy Board of Canada (NEB) approved a “commercial discovery declaration” for the company last Tuesday, stating “it is reasonable that all of Lone Pine’s 66 sections are developable by the use of hydraulic fracturing,” further adding that “there are reasonable grounds to believe the commercial discovery extends at least throughout the applied-for frontier lands.”

Lone Pine president and CEO Tim Granger told The Journalthe company is feeling optimistic about the find.

“It’s very significant; it would be significant for almost any company,” he said. “The size of the resource there is quite large.”

Lone Pine tested out its existing vertical well, known as L-68, in the last half of 2011 to gauge results from two underground shale formations. The well produced a sweet gas flow rate supporting a potential delivery of 12 million cubic feet per day from a multi-fractured horizontal well.

According to the NEB, the shale gas intervals in the Lone Pine lease area also “appear to be thicker” than those in the adjacent Horn River Basin of northeastern BC, which is promising for the developer.
“The thicker intervals combined with good reservoir parameters contribute to large original gas-in-place resource estimates,” the board stated.

Though the discovery pertains to the resource potential of the area rather than actual numbered volumes of proven natural gas, both Granger and the NEB said Lone Pine’s sections will likely yield results similar to highly productive wells nearby.

In particular, a well located around 100 km from L-68 had a 30-day gas flow rate of over 21 million cubic feet per day.

“There are a lot of analogies that would lead us and, indeed, the Canadian government to say this is a discovery,” Granger said.

An independent assessment done in September 2012 further estimated the undiscovered shale gas contained within the company’s leases could add up to anywhere between 14.4 and 28.4 trillion cubic feet.

With the granted declaration from the NEB, the company is now looking for a 21-year lease extension from Aboriginal Affairs and Northern Development Canada on its 52,202 acres in the Pointed Mountain area of the Liard Basin.

That last bit of regulatory approval, plus a slight improvement in the trade value of natural gas, are all that’s left for the company to start getting serious about developing the area, Granger said.

“The question for Lone Pine right now is commodity prices, obviously, because it’s natural gas; the ability to move the product away, but there are pipelines close by, so that’s not as big an issue; and then the way to fund the project,” he said.

Besides roads, the area includes access to the Spectra Fort Nelson gathering system via the Pointed Mountain/Beaver River sour gas pipeline that intersects Lone Pine’s acreage.

While not quite economically feasible today, Granger said he expects the project to become more viable in late 2014 or early 2015, based on current market predictions for natural gas.

“We are quite optimistic,” he said. “We still need one more level of approval and then we can start to get a little bit more serious about planning.”

To date, there has been no approval granted for horizontal fracking in the NWT. The controversial drilling extraction method uses large amounts of fresh water combined with chemicals to crack the underground shale bed and access the gas trapped within. The polluted water is then stored underground.

Fracking is vehemently opposed in many jurisdictions due to its purported impacts on groundwater and alleged link to earthquakes. Some, like France and Vermont, have all-out bans on the unconventional practice. Dene leaders passed a resolution to ban fracking in the NWT in late 2011.

Companies have also expressed interest in fracking in the Norman Wells area of the Sahtu, which sits upon the Canol shale play where an estimated one billion barrels of oil could be extracted through fracking.

The NEB is responsible for carrying out any assessments as no regulations for fracking currently exist in the territory.