Assessment and Development of the Dry Horseshoe Canyon CBM Play in Canada

Abstract

Abstract This paper discusses how the Horseshoe Canyon coalbed methane (CBM) play in Western Canada was converted from an under-explored, non-commercial resource to a major commercial play through the application and modification of technology and analysis techniques from other basins, and how this play is being developed today.As of December 2004, production from the Horseshoe Canyon CBM play is estimated to be over 100 MMscfd of gas, with future production expected to grow significantly.The first commercial developments were completed in 2003 and 2004, and drilling is increasing and expected to exceed 3,000 wells per year in 2005.[1] The Horseshoe Canyon CBM play covers a large geographic area of 200 miles by 50 miles, and exists in a large, complex vertical section with numerous coal, sand, silt, shale and mudstone layers.In addition, the play is naturally under-pressured, and the coal beds are mostly dry.Because of these complex and unique characteristics, assessment of commercial viability and development optimization can be confusing and only applicable over small parts of the play.MGV Energy, Inc. (a wholly-owned subsidiary of Ft. Worth-based Quicksilver Resources, Inc.) and its initial joint venture (JV) partner, PanCanadian Petroleum Limited (now EnCana Corp.), discovered the techniques to achieve commerciality and pioneered many of the practices used by industry today for Horseshoe Canyon CBM development.In this paper, we discuss identification of the reservoir opportunity, including data acquisition and analysis.We describe geologic and reservoir models, and production forecasting methods.We also cover completion and production practices, spacing optimization and reserves estimation procedures. Introduction The exploitation of Alberta, Canada's vast coal resource has been ongoing for many decades, but focused primarily on coal mining.However, these mining operations, together with water well drilling and conventional oil and gas development activity, highlighted a potentially large natural gas resource.Numerous geological evaluations estimate the potential CBM resource in Alberta to be between 500 and 550 Tscf.[2–4]Prior to 2000, about 200 wells had targeted these coals for evaluation, but no commercial successes resulted from this effort, due to a combination of factors, including low permeability, low gas prices and completion difficulties.[5]In addition, the Horseshoe Canyon coals were not part of these early exploration efforts. Beginning in late 2000, MGV (together with EnCana) embarked on an intense effort to characterize the shallower Horseshoe Canyon coals in Alberta, and develop the drilling, completion and production practices necessary to turn this untapped resource into a commercial play.During this initial multi-year exploration phase, we drilled over 100 wells, collected a significant amount of core data, and identified several unique characteristics of the Horseshoe Canyon coals that guided our decisions on how to develop this new resource. By early 2003, MGV began producing the first commercial CBM in Alberta's history.By the end of 2004, the Horseshoe Canyon coals had become a major CBM play in Alberta, with numerous companies developing Horseshoe Canyon projects in the corridor between Calgary and Edmonton. Geological Setting of the Horseshoe Canyon CBM Play The Horseshoe Canyon formation is one of several coal-bearing formations that encompass a large geographic area in Alberta, Canada (Fig. 1).The Horseshoe Canyon subcrops beneath glacial deposits on the eastern side of the formation, and outcrops along river valleys where there are several surface coal mines (Fig. 2).To the west, north and south, Horseshoe Canyon coals thin and become increasingly shaley. Horseshoe Canyon coals were formed in a coastal plain environment on the margins of the Bearpaw Sea.Paleo-shorelines run in a northwest-southeast direction sub-parallel to the present day Rocky Mountains.Fluctuations in relative sea level resulted in multiple thin seams interbedded with continental and shallow-marine shales, and shoreface and fluvial sandstones.These coal seams vary in lateral continuity.In some cases, individual coal seams can be mapped over 20 to 30 miles in a depositional strike direction, and up to 10 miles in a depositional dip direction.In other cases, coal seams pinch out within a mile.