Frequently Asked Questions - An assessment of the unconventional petroleum resources in the Montney Formation, West-Central Alberta and East-Central British Columbia

1. Who produced this report?  

This report was a joint effort between the National Energy Board (NEB or the Board), the BC Oil and Gas Commission, the Alberta Energy Regulator and the BC Ministry of Natural Gas Development.

2. Where is the Montney Formation?

The Montney Formation is roughly located in northeast British Columbia, south of Fort Nelson and spread into northwest Alberta past Grande Prairie.

Figure 1. Generalized map showing the location of the Montney Formation. Modified from the Geological Atlas of the Western Canada Sedimentary Basin.

Figure 1. Generalized map showing the location of the Montney Formation. Modified from the Geological Atlas of the Western Canada Sedimentary Basin.

3. What were the report's main findings?

Given recent advances in technology, such as multi-stage hydraulic fracturing, it is now possible to economically develop unconventional gas and oil in the Montney Formation. This study is the first to estimate the Montney's marketable unconventional petroleum resource.

The potential for unconventional petroleum in the Montney Formation is estimated to be very large with expected volumes of 12,719 billion m³ (449 Tcf) of marketable natural gas, 2,308 million m³ (14,521 million barrels) of marketable natural gas liquids (NGLs), and 179 million m³ (1,125 million barrels) of marketable oil.

The marketable gas estimate makes it one of the largest known gas resources in the world

4. What does marketable mean?

Marketable means the total amount of petroleum expected to be recovered from the formation that is ready to be used by consumers. In particular, for natural gas, the marketable estimate includes some "shrinkage" because impurities are removed before the gas is sold.

5. What is unconventional petroleum?

Unconventional petroleum is oil, gas, and NGLs that are very difficult to economically remove from rock formations without using complex drilling techniques or well-stimulation technology, or the formations may have other technical challenges to production.

6. Why does the Montney Formation have so much oil, gas, and NGLs in it?

The Montney Formation covers a large geographic area, approximately 130,000 km2, and is relatively thick, typically between 100 and 300 m. Because of the sheer volume of rock, it can hold vast amounts of oil, gas and NGLs.

In comparison, the prospective area of the Montney in B.C. alone is about five times larger than the Horn River Basin shale gas resource, which the NEB and former B.C. Ministry of Energy and Mines previously estimated to hold 2,198 billion m³ (78 Tcf) of marketable gas.

7. How does the Montney Formation fit within Canada's total natural gas supply and demand?

In 2012, Canada's total demand for natural gas was 88 billion m³ (3.1 Tcf). The Montney's estimated 12,719 billion m³ (449 Tcf) of marketable natural gas would therefore be equivalent to 145 years of Canada's 2012 consumption.

The Montney play is also only in the early stages of development. Its 2012 production rose to an average of 48.6 million m³/d (1.7 Bcf/d) out of total Canadian marketable gas production of 392.7 million m³/d (13.9 Bcf/d). It is expected that Montney gas production will continue to rise and increase its share of Canadian production.

The marketable NGLs and oil volumes in the Montney Formation are also large, though the volume of marketable oil remains very uncertain. This is because the areas richest in Montney unconventional oil tend to be in shallower areas, where pressures in the formation are lower and the oil more difficult to recover, increasing uncertainty about how much of it will be developed. Montney unconventional oil production averaged only 4108 m³/d (25,845 b/d) in 2012, a small amount of total Canadian oil production, which averaged 513,960 m³/d (3.23 million b/d).

8. What does this mean for natural gas production in Canada?

This report indicates that Canadian markets will continue to be very well supplied with natural gas.

In 2011, the NEB and the former B.C. Ministry of Energy and Mines conducted a similar report that estimated the amount of unconventional marketable gas in the Horn River Basin to be approximately 2,198 billion m³ (78 Tcf). In prior years, the NEB has also worked with the Western Canadian provinces to estimate their conventional natural gas potential. Altogether, the combination of conventional and unconventional marketable gas resources, including the Montney Formation, shows a great potential for future natural gas production out of western Canada.

Based on these findings, the total potential for gas production out of the Western Canada Sedimentary Basin has more than doubled to 23,249 billion m³ (821 Tcf), of which 17,898 billion m³ (632 Tcf) of marketable gas are remaining after production to date has been subtracted. This estimate could still grow since it excludes many other large unconventional plays in western Canada whose marketable resources have yet to be assessed, such as the Liard Basin shales of British Columbia and the Duvernay Shale of Alberta.

9. Who regulates hydraulic fracturing?

Horizontal drilling and multi-stage hydraulic fracturing in the Montney Formation are regulated at a provincial level. Please contact the BC Oil and Gas Commission in BC or the Alberta Energy Regulator in Alberta for more information on their regulatory processes.

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