Canadian Natural Gas

Full Potential: Unconventional Gas

Development in Canada
Full Potential
Unconventional Gas Development in Canada
n Natural gas from unconventional sources will be an important engine of growth and employment
for Canada’s natural gas production industry.
n New technologies have unlocked the vast potential of natural gas from unconventional sources.
n According to a 2010 estimate by the Canadian Society for Unconventional Gas, Canada has a
natural gas resource base between 700 -1300 Tcf, enough to support current production levels for
well over 100 years.
n Stringent and comprehensive regulations govern unconventional natural gas development in
Canada. The natural gas industry continues to work with regulators and policymakers to ensure
development is conducted in a responsible manner on an ongoing basis.

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 “ If Canada is to achieve its energy and environmental
objectives, Canadian natural gas must be recognized as

”
a core strategic asset.

Summary
Canadian Natural Gas is smart energy: it is an abundant growing domestic resource; a significant
source of revenue; an affordable energy choice; a safe and reliable fuel; the cleanest-burning
hydrocarbon; and a flexible partner in generation and in transportation. If Canada is to achieve its
energy and environmental objectives, Canadian natural gas must be recognized as a core strategic
asset. Natural gas is a foundation of a sustainable energy future.

Technology has made it possible to economically produce more natural gas than previously thought
possible. These advances in horizontal drilling and reservoir stimulation techniques have led to greater
robustness of North American natural gas supply. The industry continues to work with regulators
and policy makers to ensure that development is conducted in a responsible manner. Stringent and
comprehensive regulations govern both conventional and unconventional natural gas development in
Canada. These regulations address the impact of unconventional natural gas development on land, air
and water.
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It’s Not Unusual
There is nothing chemically
unusual about unconventional
natural gas compared with
conventional gas. All natural
gas recovered from below the
Earth’s surface formed millions
of years ago by the decay
of organic matter trapped in
geological formations.
The term “unconventional”
refers to the types of reservoirs
where the gas is found, and in
some cases the mechanism
of storage in the reservoir.
The traditional way to produce
conventional natural gas is
by drilling a well that taps
into rocks in the subsurface
where gas is stored under
compression in the pores of
permeable rock. This gas is
easily produced. However,
natural gas also occurs in other
geological formations, where
the gas is an integral part of
less permeable types of rock
formations. These widespread
gas fields are found in several
regions in Canada and form
the basis for the country’s
unconventional gas industry.
The three most common types
of unconventional natural gas
are:
SHALE GAS
Found in extremely fine-grained,
essentially impermeable
sedimentary rocks requiring
complex reservoir stimulation to
help the natural gas flow.
TIGHT GAS
Found in the pore space
of sedimentary rocks that
have very low permeability.
Reservoir stimulation is required
to recover tight gas resources.
COAL BED METHANE (CBM)
Formed during the process of
coalification. In this process,
methane is generated and
trapped as peat turns into
lignite and later into coal. In coal
seams, methane is primarily
stored by adsorption to solid
hydrocarbon molecules. A
range of reservoir stimulation
methods are used to recover
the resource.
A Brief History of
Unconventional Gas
Development in Canada
Until the mid-1990s the
majority of Canadian natural
gas production came
from conventional gas
resources. Rapid growth
of unconventional gas
production in the US began
in the early 1990’s as a result
of declining conventional
production and tax incentives
for unconventional resource
development. Canadian
development has lagged by
about a decade.
Hydraulic fracturing technology
has been used for oil and gas
development for 60 years,
beginning in the US with its
application in Canada quickly
following. Fracturing was first
completed in Canada in the
Pembina Cardium oil field in
the 1950s. It continued with
thousands of completions
in shallow gas wells in the
Medicine Hat area.
Fracturing technology is now
used to enhance production
rates and resource recovery in
most oil and gas development
areas. Without fracturing,
the majority of new wells
in the WCSB would not be
economical. The same is true
of oil development currently
taking place in the Bakken
shale oil play in southeast
Saskatchewan.
Based on National Energy
Board deliverability estimates
for the end of 2009, natural
gas production from
unconventional sources
accounted for 36.5% of
Canadian gas supply, up from
34.5% in 2008.
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 A Wellspring of Innovation
Reservoir stimulation by
fracturing was first developed
in the United States in the
1950s to increase production,
typically in conventional
vertical wells. Horizontal wells
have experienced significant
growth in the last few
years. These wells have the
benefit of allowing access to
unconventional natural gas as
well as environmental benefits.
These benefits include the
ability to consolidate multiple
gas wells into a single location,
leading to a significantly smaller
footprint from well pads, roads,
pipelines, and surface facilities.
Unconventional natural gas
production does not use
a single technique that is
universally applied to every
geological formation. Each gas
well is a unique situation
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requiring careful analysis and
advanced knowledge to match
the well’s parameters with the
methods used.
To take advantage of the
many benefits this domestic
unconventional gas resource
offers as a clean, reliable,
affordable, and flexible energy
source, it is often necessary to
employ reservoir stimulation
techniques, often referred to
as fracturing or “fraccing.”
However, it is worth noting
that not all unconventional
gas resources require fracture
stimulation to produce gas.
Hydraulic fracturing is the
process of creating pressure
deep underground, after a gas
well is drilled, to fracture or
crack the rock at the bottom of
the well. This is done by
pumping a fluid, often
containing a suspended
proppant (typically sand),
down into a wellbore in order
to increase productivity of a
well. The substances used for
fracturing are carefully matched
with the geology of the site to
ensure the best results.
The combination of the
pumping rates and pressures
causes the rock to fracture or
crack. Once the treatment is
complete, some or all of the
frac fluid can be recovered
by flowing back the well. If a
proppant was used, it is left
behind, propping open the
fractures. The newly created
fracture enables natural gas, oil,
frac fluids and formation water
to flow to the wellbore.
Growing Business and Growing
Environmental Awareness
Although hydraulic fracturing
has been in use for over 50
years, the increase in the
production of unconventional
natural gas particularly in the
United States, coupled with a
rise in public awareness about
the environment, has led to
questions about the various
technologies and practices.
These questions led the U.S.
Environmental Protection
Agency (EPA) to announce
in March 2010 that it was
launching a comprehensive
independent scientific review
of environmental impacts
from hydraulic fracturing. The
EPA’s last study, conducted in
2004, found no link between
hydraulic fracturing and the
contamination of drinking water.
Fracturing has not
been found to have
Fact: caused damage
to groundwater
resources.
In Canada, regulations ensure
that groundwater and the
environment are protected,
including in relation to hydraulic
fracturing. The specific
regulations vary between
jurisdictions but in all cases
groundwater and the
hydraulically fractured zone are
isolated to prevent potential
cross-flow of fluids between the
natural gas-producing intervals
and groundwater aquifers.
The Canadian natural gas
industry takes public concern
very seriously and is committed
to providing the best available
information about all aspects
of natural gas production and
use, as well as identifying
and addressing areas of
concern. The industry’s
overall commitment to high
environmental standards
means that companies are
continuously adopting new
technology and identifying and
adopting best practices.
DRINKING WATER
Over more than fifty years,
fracturing has not been found
to have caused damage to
groundwater resources.
Evidence submitted by the
Interstate Oil and Gas Compact
Commission (representing
governments and regulators
with jurisdiction over the U.S.
oil and gas industry) to The
House Committee on Natural
Resources, Subcommittee on
Energy and Mineral Resources
on June 18, 2009, references
a July 2002 review by member
states of 948,597 oil and
Unconventional Gas &
The Environment: For
Further Reading
National Energy Board
http://www.neb.gc.ca
The NEB is a key Canadian
regulator in the energy
sector. The NEB also provides
information about natural
gas, oil and electricity. Its site
contains regional and national
information about the natural
gas industry, including the
2009 document, A Primer for
Understanding Canadian Shale
Gas.
Canadian Society for
Unconventional Gas
http://www.csug.ca
CSUG is an industry-funded
not-for-profit organization
formed to support the
exploration and development
of Canadian unconventional
gas resources. The site
includes videos and animations
on how unconventional gas
resources are responsibly
developed.
Energy in Depth
http://www.energyindepth.org
Energy in Depth is a U.S.
industry-sponsored website
which provides considerable
information on hydraulic
fracturing and additives used
in the process, as well as
links to government reports
and websites that discuss the
process and environmental
risks.
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 natural gas wells that had been
fracced since the use of the
technology began. No harm to
groundwater was attributable
to hydraulic fracturing in any
of these wells. On average,
35,000 wells are hydraulically
fractured in the United
States each year, bringing the
aggregate total to well over
1,000,000 wells to date.
Canadian regulations
and operational
Fact: practices provide
assurance that the
risk of accidents has
been minimized.
Concerns have occasionally
been raised in the United States
by landowners who believe
that the integrity of their water
wells has been compromised
by ground disturbances
caused by fracturing, leading
to contamination by gasses,
hydrocarbons or chemicals. In
Alberta, similar concerns have
been expressed in relation to
fracturing at shallow depths
for the production of coalbed
methane.
Independent investigations
of incidents initially reported
as attributable to hydraulic
fracturing have consistently
determined that hydraulic
fracturing was not the cause,
although in some cases the
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determination has been made
that the incident was caused by
operator error in natural gas well
construction or by leaks during
the transportation or storage
of materials. In other cases,
the water supply or water well
concerns have been found
to be the result of water well
construction or maintenance
problems.
Regulation of the Canadian
oil and gas sector is designed
to protect drinking water.
The Alberta regulator, for
example, requires natural
gas development to provide
a substantial buffer (both
vertically and laterally) between
any shallow stimulation interval
and existing water wells, in
addition to the isolation of the
aquifer and the fractured zone.
Alberta has also increased the
focus on water well education
and standards in oil and gas
producing areas.
Natural gas well construction
is an industrial activity and as
such it is heavily regulated
in all Canadian jurisdictions.
Unlike the common domestic
water well, construction of
an oil or gas well results in
multiple concentric pipes that
are cemented into place. This
provides mechanical strength
as well as hydraulic isolation of
aquifers from production zones,
preventing cross-contamination.
Canadian regulations and
operational practices provide
assurance that the risk of
accidents has been minimized
and the appropriate oversight is
in place.
The chemicals used as
fracturing additives are also
sometimes cited when there
are concerns about drinking
water. These additives vary
in amount and composition,
typically making up less than
one per cent in total of the
fracturing fluid (the rest being
water and proppant). These
fluids are injected deep in the
earth, thousands of metres
below the level of drinking
water aquifers.
Fracturing companies are
competitive and engage
in significant research and
development to develop
effective fracturing fluids
and processes. While many
fracturing additives are benign,
there are some chemical
additives used that are listed
as dangerous substances in
Canada under the Canadian
Environmental Protection Act.
These chemicals are commonly
used by various industries, for
a variety of purposes. In all
cases, through the Canadian
Environmental Protection Act,
Environment Canada regulates
how these substances are
handled, used and disposed
of, and what concentrations
are allowed. In Canada, the
industry recognizes the public
interest benefits of being
transparent about fracturing
additives while still maintaining
its competitive advantages.
Companies are also
increasingly devoting research
and development efforts to
developing green fracturing
fluids that do not include any
toxins and are made up of food-
safe additives and products that
do not bioaccumulate.
Fracturing additives
are injected deep
Fact: in the earth below
the level of drinking
water aquifers.
PRODUCED WATER
When water is produced with
natural gas from a gas well, it
is separated from the natural
gas. This water is responsibly
disposed of in one of the
following ways:
n In Western Canada, natural
gas producers are required
by regulation to re-inject
produced water into saline
zones located far below
the base of groundwater
protection, using water
disposal wells.
n In other regions, because
there are no disposal
wells water is treated and
disposed of as required by
provincial regulation.
n In some cases, the water
is re-used for industrial
purposes.
Some of the fracturing fluid
is also recovered from wells
both following the reservoir
stimulation, and also during
subsequent natural gas
production, along with water
that may occur naturally within
the reservoir. Fracturing fluid
and all other water produced
is contained for re-use or
transportation to a disposal
well or other disposal facility,
according to regulatory
requirements.
WATER USE
Water is typically used in
drilling and for hydraulic
fracturing operations to
create a fracture network or
enhance the inherent fracture
network in low permeability
conventional reservoirs as well
as unconventional reservoirs.
A typical fracturing operation in
a horizontal well with modern,
multi-stage hydraulic fracture
stimulations might use between
1 and 5 million gallons (3500
m3 to 15000 m3) of water,
considerably more water than
traditional operations. In a
full scale field development
Unconventional Gas &
The Environment: For
Further Reading
Interstate Oil and Gas
Compact Commission
http://www.iogcc.state.ok.us
The IOGCC represents the
oil and gas governments and
regulators in the U.S. Five
Canadian provinces and one
territory are affiliate members.
Groundwater Protection
Council
http://www.gwpc.org
The GWPC is an organization
of U.S. state groundwater
regulatory agencies. The
site’s library provides links to
a number of reports, papers,
and submissions which
address environmental and
groundwater risks associated
with oil and gas development.
United States Department
of Energy, Office of Fossil
Energy
http://www.fossil.energy.gov
Includes the paper, Modern
Shale Gas Development in
the United States: A Primer
(April 2009). This report was
prepared for the Office of
Fossil Energy and the National
Energy Technology Laboratory
by the Groundwater Protection
Council and ALL Consulting.
It provides an overview of
shale gas development,
operations, regulation, risks,
and groundwater protection,
including hydraulic fracturing.
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 scenario operators might drill
several hundred natural gas
wells a year (across an area
of thousands of square km).
Therefore, a significant amount
of water is required for reservoir
stimulation. The quantity of
water that natural gas producers
can use for reservoir stimulation
is regulated by various
provinces.
When a well is no
longer productive,
Fact: the surface is
restored, according
to environmental
permits.
The natural gas industry is
also aware that multi-stage
hydraulic fracturing operations
for shale gas and tight gas
development are water
intensive and reducing that
intensity is a priority. To reduce
water intensity, operators are
pursuing a variety of strategies
which include processing
and recycling recovered frac
fluids, the use of non-potable
brackish and saline water from
subsurface reservoirs, and the
evaluation and use of other
fluids as an alternative to water
(carbon dioxide, nitrogen).
As is the case for water used
for drilling operations, approvals
for water use are required from
the responsible regulatory
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agency or government
department. Regulators and
governments have a variety
of mechanisms or controls
available to manage water
use and mitigate potential
impacts including the ability
to limit the rate at which
water is used from any source
and the ability to specify
aggregate water use limits
for operations. Governments
and regulators commonly use
these mechanisms to manage
resource developments
(mining operations, enhanced
oil recovery projects), as well
as agricultural operations
(irrigation), industrial and
commercial operations
(shopping malls, resorts) and
recreational facilities (golf
courses, ski hills).
LAND DISTURBANCE
Emerging production
technologies means that today’s
wells are drilled more efficiently
with less impact on the land
than in the past. Today’s drill
rigs create less waste, and are
smaller and more efficient so
they can be moved easily from
place to place with less impact
on the land.
One technique that is being
widely used by industry is
horizontal and directional
drilling. With these drilling
techniques, companies are able
to reach oil and gas reservoirs
at greater distances from the
surface hole, horizontally and
at angles rather than straight
vertical drilling. Drilling multiple
wellbores from a single pad
location (pad drilling) also helps
to minimize environmental
impact on the surface. Gas
companies have successfully
used this technique to access
reservoirs under water bodies
as wells as from outside of
environmentally sensitive
areas, avoiding habitat or other
environmental disturbance
within protected areas.
When a well is no longer
productive, the surface
is restored, according to
environmental permits.
Depending on location, it can
take five years or more to
complete the reclamation of
the land. The process includes
plugging and capping the well,
removing equipment, cleaning
up any residual chemicals,
replacing topsoil, and re-planting
the site with the appropriate
vegetation. A government
reclamation certificate or
other approval is issued when
the work meets regulated
requirements.
For more information:
Paula Dunlop,
Director, Communications,
Canadian Gas Association
613-748-0057, ext 341
pdunlop@cga.ca
Canadian Natural Gas is a made-in-Canada advocacy project sponsored by the following associations:

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