Overview of the Montney Unconventional Gas Play Northeast British Columbia, Canada URTec Conference Operators Forum July 23, 2015 Prepared by George Voneiff, Peter Bastian, John Jochen, Brad Wolters UGR Blair Creek, Ltd.…
MONTNEY PLAY KEY TAKEAWAYS MONTNEY PLAY WHY DO YOU CARE Where is the Montney 3.0+ Bcf/D & growing rapidly In Western Canada (Alberta, BC) US9 billion/year in wells & mid- Surprisingly unknown outside of stream is adding 1+ Bcf/D per…
Montney Play Overview Confidential and Proprietary 3
Montney is a World-Class Play About the Size of the Marcellus Covers parts of Alberta and Northeast British Columbia provinces in Canada Over 4,200 Tcf and 140 billion bbl oil in place From Canadian National Energy Board (NEB) UGR…
Geology Review Montney Deposition Montney Formation Extends over a large area of Alberta and BC encompassing approximately 50,000 square miles Early Triassic in age (245 million years ago) The Montney is not a shale It is a very…
Montney Began as a Conventional Play Three main types of deposits in the Montney Shoreline and shelf deposits comprising sandstones, siltstones and coquinas, with conventional high permeability oil and gas reservoirs exploited in the…
UGR Lands are in the Heart of the North Montney Fairway The North Montney is a northwest extension of the Montney Unconventional Play from the British Columbia/Alberta border Since 2006, operators have drilled over 2,000 Hz…
BC Montney Production is Ramping Up Confidential and Proprietary 8
Montney is a THICK Formation Four stratigraphic zones can be mapped over a large portion of the play 1,000 thick formation (300 m) = 3+ stacked plays Three completion zones, all tested vertically and horizontally Average…
Montney Reservoir Characteristics Moderate depths of 1,600 m to 2,600 m (5,200 ft to 8,500 ft) Over-pressured in many areas Gradients between 0.50 psi/ft and 0.7 psi/ft Some liquids-rich areas Most of BC part of play is dry gas to…
Montney Wells Have Shallow Decline Rates Why shallow decline rates Recent UGR Wells Montney is not a shale Production Curves Enhanced permeability from natural fracturing in low- porosity areas Some areas have better…
Montney Industry Trends Drilling Pad drilling is now very common 3 completion targets (Upper, Middle, Lower Montney) Single pads may have 12 to 18+ wells per pad Completed laterals are getting longer Previous: 4,600 ft (1,400 m)…
Completed Laterals Are Getting Longer Confidential and Proprietary 13
Montney Industry Trends Completions Completions Transition to slickwater started in earnest in 2009; now dominates Historically, cemented liners with plug & perf have dominated Initially, single perf cluster per stage, then Gradual…
Slickwater Has Taken Over Confidential and Proprietary 15
Open-Hole Ball Drop Systems Are Becoming More Common Confidential and Proprietary 16
What About Water Management FRAC WATER IS PLENTIFUL, and is sourced from lakes, rivers and private land owners However, trucking from the source and to disposal is a major cost consideration Short-term storage solutions include…
Drilling & Completion Costs Are Decreasing Costs continue to drop Overall costs are down 30+% in 2015 Additional logistical savings should occur with true development drilling and completion programs Drilling cost observations Most…
Canada vs. U.S. Market Differentiations Ownership Provinces own the vast majority of mineral rights Leases obtained through monthly sealed-bid auctions Royalties Sliding scale based on price and production rate Province credits share…
UGR Montney Position Confidential and Proprietary 20
Who Is Operating in the North Montney The North Montney was initially drilled in 2009 and had 28 rigs running in the local UGR area (Progress was running 20 of those rigs) in Q4 2014 Progress (Petronas), Shell, Suncor, CNRL, Painted…
UGR Is In A Sweet Spot: Good Wells in Three Zones North Montney Well Quality and Completion Zone Good wells in all three zones Over-pressured (0.5 to 0.65 psi/ft) Dry gas wells are deeper, higher pressure, Jedney higher rate…
Montney Frac Optimization: Making Better Wells Confidential and Proprietary 23
Comprehensive Look at the Data We started by evaluating regional and local industry trends in the data Looked at many completion parameters as a function of time, such as lateral length, injection rates, fluid volumes, sand…
More Sand = More Production Confidential and Proprietary 25
What the Data Show There is clear evidence that we can materially increase production from Montney wells by pumping more sand and completing longer laterals Multivariate regression analysis of local completion & production data…
Execution and Economics We can utilize more sand and longer laterals with negligible operational risk Increase average sand per unit length of lateral from 670 lbs/ft (1,000 kg/m) to 1,000 lbs/ft (1,500 kg/m) equates to moving from…
Technical Workflow Summary We used regression analysis of completion and production data to quantify how much production will increase by pumping more sand Multiple Linear Regression (least-squares fit) of regional completion and…
Regression Dataset is in the NW BC Montney Location of Regression Dataset Wells Location of Type Curve Wells Regression Dataset: 73 Upper Montney wells 62 Lower Montney wells Beg Town Kobes Confidential and…
Regression Analysis Multivariate Regression allows multiple completion parameters to be used simultaneously to predict well performance Least-Squares fit of the regression dataset Many different models (combinations of completion…
Adjusting the Type Curves We adjust the Base Type Curves by applying the % Increase to B3 & EUR To reflect the average lateral lengths and sand intensity of the optimized completion B3 is adjusted by uniformly raising all the type…
Example Adjusted Gas Type Curves Confidential and Proprietary 32
Single-Well Economics from the UGR Town Area Confidential and Proprietary 33
COMPLETION OPTIMIZATION KEY TAKEAWAYS There is clear evidence that we can materially increase production from Montney wells by pumping more sand and completing longer laterals Net impact of more sand, longer laterals = 50%+ increase…
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