Canada’s Montney Shale play is gaining huge attention due to its unconventional gas reserves, securing enormous investments as operators compete for valuable areas, a new report by GlobalData has found.
The report found that decreasing conventional resources in North America, coupled with an increasing focus on the development of unconventional resources, has been increasing production in the region for the last few years, with the Montney Shale currently attracting the majority of unconventional development in Canada.
Historically, this play was largely overlooked by operators, due to low natural gas prices and low levels of reserves in the play. However, the Montney Shale play is now expected to attract increasing numbers of investments due to drilling activities occurring as result of a reduction in royalty rates by the provincial government of Alberta.
Unconventional resources in Canada are attracting different mergers, acquisitions, and asset transactions deals to the country, due to the efforts of oil and gas operators to strengthen their reserves and production portfolios. One of the major asset transactions in the Montney Shale was Petronas’s acquisition of around 50% working interest in Progress Energy Resources for approximately $1.1 billion in 2011.
Over 25 major operators currently operate in the area, and strong developmental growth in the shale has rewarded leading producers such as EnCana with high-quality natural gas.
Natural gas production in the Montney Shale play began in 2006, with 46 drilling permits issued, leading to production of approximately 6.94 billion cubic feet (bcf) of natural gas. Production increased throughout 2006-2010 at an average annual growth rate (AAGR) of 61.3% to reach 80.4bcf, from a total of 159 wells. Between January and October 2011, the Montney Shale produced a record 98.3bcf of natural gas.