Natuml Resources



A TIP Secretariat 580 Booth Street, 11th Floor Ottawa, ON K IA OE4 Facsimile (613) 995-0693

Secretariat de l'AIPRP

580, rue Booth, 11e etage Ottawa ON K I A OE4 Telecopieur: (613) 995-0693


file: DC7040-11-335/MS

June 14,2012

Ms. Trish Audette Environment Reporter Edmonton Journal 10006-101 St. EdmontonAB T5J OSl Dear Ms. Audette: This is in response to your request made pursuant to the Access to Information Act, which was received in our Department on March 19,2012, and reads as follows: "All correspondence between the department and the Canadian Association of Petroleum Producers, and all relevant briefing notes, regarding fracturing fluid additive disclosure and/or the industry's national hydraulic fracturing operation practices. Please exclude issued press releases. For the period: January 2011- March 19,2012." Enclosed is the information which you have requested, Portions of the records have been severed, pursuant to section 25 of the Act. The sections that were severed qualify for exemption under sections 20( 1)(b), 20( 1)(c), 21(1)(b), 21(1)(c), of the Act (copies enclosed). Please be advised that you are entitled to complain to the Information Commissioner concerning the processing of your request within sixty days of the receipt of this notice. Notice of complaint should be addressed to: The Information Commissioner of Canada Place de Ville, 22nd Floor, Tower B 112 Kent Street, Ottawa, Ontario KIA IH3 Tel: (613) 995-2410 Toll-free 1-800-267-0441 Fax: (613) 947-7294

Should you have any questions regarding the foregoing, please do not hesitate to contact Michael Souliere at 613~995~8678 or bye-mail at m ichae I.



Sincerely yours,


Le_ (

1. Copies of the Act 2. Pages 001 to 006, 008 to 039

Terry Murray Director Access to Information and Privacy Enclosures:

Access to Information Act Exemptions and Exclusions


(b) financial, commercial, scientific or technical information that is confidential information supplied to a government institution by a third party and is treated consistently in a confidential manner by the third party;




(c) information the disclosure of which could reasonably be expected to result in material financial loss or gain to, or could reasonably be expected to prejudice the competitive position of, a third party; or




(b) an account of consultations or deliberations involving officers or employees of a government institution, a minister of the Crown or the staff of a minister of the Crown,


(c) positions or plans developed for the purpose of negotiations carried on or to be carried on by or on behalf of the Government of Canada and considerations relating thereto, 0'"


Natulal Hasouecss Canada

RessourcGs naturallss




SUMMARY .. Mr. Dunn requested this meeting to discuss three main issues: environmental concerns surrounding shale gas fracking; greenhouse gas (GHG) regulations; and competitive challenges facing the natural gas industry. Attachment 1 includes Encana's company profile, as well as Mr. DUM's biography. Attachment 2 contains talking points, Attachment 3 provides more detailed information on the Canadian Association of Petroleum Producers' (CAPP) 2012 budget proposal, Attachment 4 provides information on CAPP's voluntary guidelines for hydraulic fracturing and Attachment 5 includes Natural Resources Canada's (NRCan) shale gas fact sheets.

Environmental concerns surrounding hydraulic fracturing Environmental groups and shaJe gas protestors often cite welJ contamination, water use, seismic activity, land disturbance, gas migration and a lack oftransparency as their key concerns with hydraulic fracturing. To date, there have been no confirmed cases of well contamination in Canada on account of hydraulic fracturing acti vities.

dl.. Ca 11a a


-2On September 221 2011, newspapers reported that the Government supporting two studies on hydraulic fracturing:

UNCLASSIFIED of Canada was

1. A Council of Canadian Academies Study (sponsored by Environment Canada
(EC) and supported by NRCan); and 2. An internal EC review. NRCan is also on a shale gas interdepartmental and EC's Mr. Mike Beale. committee, co-led by Mr. Geoff Munro

Development of GHG regulations EC is regulating GHG emissions on a sector-by-sector basis and aligning with the regulatory approach in the United States (U.S.), where appropriate.

Ee has already taken action on transportation and electricity, and intends to address
emissions in the oil and gas sector, though no official start date has been announced. NRCan's Energy Sector is currently working with industry (CAPP) to update shale gas emission parameters for NRCan's GHGenius model. Competitive challenges facing the natural gas industry Monthly natural gas prices at Alberta's AECO Hub™ have been sub $4 per gigajoule (GJ) for the past 17 months, well below the five-year average of $5. 74 per GJ. Analysts expect natural gas prices to remain low over the next year. Encana believes fiscal measures are required to give Canadian producers a chance of competing on a level playing field with U.S. producers, who are more advanced at developing shale gas. This reflects the fact that U.S. shale gas is located in areas with abundant infrastructure, including pipelines. This is not the case in Northeast British Columbia, where most Canadian shale gas resources are concentrated. Mr. Dunn may refer to CAPP's 2012 budget proposal as away to enhance Canadian

competiti veness,


Environmental concerns surrounding hydraulic fracturing NRCan does not regulate onshore oil and natural gas drilling and production.
contributes scientific information used in making exploration, environmental protection decisions by the provinces.

NRCan and

resource management

nnnn.n ...



The federal government does have a role to play in providing factual information to the public on resource development, including shale gas. To that end, NRCan has published a set of Shale Gas Fact Sheets on its external Web site. The department will be looking to add more fact-based material in the coming months. Encana supports CAPP's set of voluntary guiding principles for hydraulic fracturing that guide water management and improved water and fluids reporting practices for shale gas development in Canada. Development of GHG regulations In December 2009, the Government committed to a national GHG emissions reduction target of 17 percent below 2005 levels by 2020, and inscribed this in the Copenhagen Accord. The Canadian and U.S. governments are already collaborating through the development of regulations for vehicle tailpipe emissions for light-duty and heavy-duty vehicles. Competitive challenges facing the natural gas industry Shares in Encana, Canada's largest natural gas producer, have fallen approximately 22 percent in the past 12 months. Encana's president partially attributed the fall to disappointment over the collapse of a $5 A-billion joint venture with PetroChina. When Mr. Dunn visited with NRCan officials last year, he focused on three main competitive challenges: 1. Fiscal regimes and royalty issues. Mr. Dunn advocates fiscal terms that are focused on removing the front end burden (e.g. similar to Alberta's regime). 2. High costs. Canadian producers may be at a disadvantage due to their distance from markets, a challenging envirorunent, lack of infrastructure and the strength of the Canadian dollar. Encana is looking at operational improvements to reduce costs and improve productivity. 3. CAPP 's budget proposal. The 2012 proposal asks the federal government to allow Canadian natural gas development and completion costs to be deducted, for a time-limited period of24 months, at a 50-percent straight-line rate.

It is recommended discussion that you consider drawing upon the attached materials for your

with Mr. Dunn.


~4 -


Mark Corey Attachments: (5) Contact: Stacey Power, 613~992~1023 Petroleum Resources Branch, ES

Vice-President, Government and Regulatory Relations Canadian Division, Encana Corporation

Richard Dunn is Vice-President, Government and Regulatory Relations, in Encana's Canadian Division, His responsibilities include Federal and Provincial government relations and policy development. After graduation from the University of British Columbia (Applied Science Mechanical Engineering) in 1978, Richard gained experience in both upstream oil and gas and petrochemical operations, Richard joined PanCanadian Petroleum in 1986, where he held various technical and leadership positions, rising to the position of Chief Production Engineer. Since the formation of Encana in 2002, Richard's responsibilities have included provincial government relations. In this capacity, he has been significantly involved with the formulation and implementation of strategies which have stimulated increases in Canadian oil and gas activity, Richard is married with three children, He actively participates in both community and public education band programs and has coached community sports programs for a number of years,

Encana on 9th (Encana Place) 150, 8th Avenue SW



Box 2850 I Calgary, AB T2P 2S5

phone (403) 645-2000 ) fax (403 290-6577

Attachment 2 Talking Points for your Meeting with Encana on September 26, 2011 Environmental concerns surrounding hydraulic fracturing

The regulation of onshore oil and natural gas drilling and production (including shale gas) falls primarily under provincial jurisdiction. The Government of Canada contributes scientific information used in making exploration, resource management and environmental protection decisions by the provinces.


The Government of Canada is committed to the safe, responsible and sustainable development of Canada's natural resources.

Development of Greenhouse Gas regulations • The government is making progress towards the target of reducing Canada's GHG emissions 17 percent from 2005 levels by 2020 through a sector-by-sector approach aligned with that of the United States (U.S.), where appropriate. As outlined in the Canada Gazette, the government of Canada is moving forward with regulations for the coal-fired electricity sector. These regulations will promote a gradual phase-out of traditional coal-fired generation and promote a transition towards lower- or non-emitting types of generation such as highefficiency natural gas, renewable energy, or fossil fuel-fired power with carbon capture and storage.

Competitive challenges facing the natural gas industry

While the Government relies on market forces to the extent possible, it encourages the use ofless carbon-intensive power choices through initiatives such as excise tax exemptions in the transportation sector and rebates for highefficiency natural gas furnaces and water heaters, thereby benefitting the natural gas industry. NRCan recently led an LNG trade mission in Asia to attract Asian investment to Canada as well as the diversification of natural gas export markets.


I appreciate the analytical effort that was put into CAPP's 2012 budget proposal. I can assure you that my officials are reviewing it in detail.



000001 to I

a 000007

is (are) exempted pursuant to sectlerus) est(sont) exempteets) en vertu de(s)(I')article{s)

21(1)(c), 20(1)(c), 21(1)(b), 20(1)(b)

of the Access to Information Loi sur l'acces

a I'information

Canada's shale gas and tight gas industry supports a responsible approach to water management and is committed to continuous performance improvement. Protecting water resources during sourcing, use and handling is a key priority for our industry. We support and abide by all regulations governing hydraulic fracturing operations, water use and water protection. In addition, we commit to following these guiding principles:

We will safeguard the quality and quantity of regional surface and groundwater resources, through sound well bore construction practices, sourcing fresh water alternatives where appropriate, and recycling water for reuse as much as practical.

We will measure and dlsc'ose our water use with the goal of continuing to reduce our effect on the environment.

We will support the development of fracturing fluid additives with the least environmental risks.

We will support the disclosure of fracturing fluid additives.

We will continue to advance, collaborate on and communicate technologies and best practices that reduce the potential environmental risks of hydraulic fracturing.

Shale gas and tight gas, for the purpose of these principles, refers to unconventional gas resources from low permeability reservoirs being developed using horizontal wells with multi-stage hydraulic fracturing.
Cr\N,\DIAi'i ,\j,O~I/lrIQ:-< Of PETROLEUM rRODUCEr,s

Shale gas
Key facts

Shale gas is emerging as the new low-cost source of natural gas in North America. In Canada. potential and producing shale gas resources are found in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia. Most of the current driliing and production activities are occurring in northeast British Columbia in the Montney and Hom River shale basins. Natural gas is a relatively clean-burning, abundant and efficient source of energy. It has become a popular fuel for residential, commercial and industrial applications. Natural gas is an important transition fuel for a low-carbon economy. because it is cleaner burning than any other fossil fuel and is in abundant supply. Current research estimates that the natural gas supply in North AmerIca, largely in the form of shale gas, will last more than 100 years.

Natural gas offers the potential to replace fuels that produce more greenhouse used for power generation, approximately heating and transportation.

gases (GHGs}and that are currently are

For example, GHG emissions from natural gas combustion

30 percent cleaner tha n those from oil and 45 percent deaner than those from coal.

Technological advancements in drilling (long-reach horizontal welJ bores) and completion techniques (multistage hydraulic fracturing) have allowed commercial production of natural gas from shales, which has increased the longterm outlook for the supply of natural gas in North America.

Hydraulic fracturing has been used by the industry to safely stimulate oil and gas production conventional reservoirs tor more than 60 years.

in North American

Although shale gas development is a relatively mature industry in the United States (with more than 40 000 producing wells), shale gas is still in its nascent stages in Canada.

Frequently asked questions
Who regulates shale gas development?
Under Canada's Constitution, their development. provinces own onshore resources within their borders and are responsible for regulating

What is Natural Resources Canada's role in shale gas development?
Natural Resources Canada provides geoscience information environmental protection decisions. used in making exploration, resource management and

at 613-996-6886

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r~l.No. M 164·315-2010 (Print)


Gaz de schiste
Faits importants
Le gaz de schiste s'irnpose Amerique du Nord. Au Canada, en Alberta, plupart des Hom River, de plus en plus comme nouvelle source d'approvisionnement en gaz natural

a faible

coOt en


on trouve des res sources potentielles, et des exploitations de gaz de schlste, en Colombie-Britannique, en Saskatchewan, au Manitoba, en Ontario, au Quebec, au Nouveau-Brunswick et en Nouvelle-Ecosse. La activltes de forage et de production en cours se deroulent dans les bassins de schiste de Montney et de dans Ie nord-est de la Colombie-Britannlque. Ce combustible est de plus en plus


Le gaz naturel est une source d'enerqie relativement propre, efficace et abondante, utilise dans les services residentlels, commerclaux et industriels.

Le gaz naturel represente un combustible important dans la transition vers une econornle a faible combustion de carbone, car en brOlant, il degage moins de residus que tout autre combustible fossile et il existe en grande quantlte. Les chercheurs estiment que les reserves de gal naturel de l'Amsrique du Nord, en grande partie cornposees de gal de schiste, pourront etre exploitees pendant plus de 100 ans. Le gal naturel peut remplacer les combustibles qui produisent davantage de gal a effet de serre (GES) actuellement utilises dans des domaines tels que la production d'enerqie, Ie chauffage et les transports. A titre d'exemple, les emissions de GES attribuables a la combustion du gal naturel sent approximativement 30 p. 100 moins polluantes que les emissions assoclees au petrole et 45 p, 100 moins polluantes que celles associees au charbon, Les progres technologiques en matiere de forag e (forages horizontaux a longue portee) et les nouvelles techn iq ues de completion des puits (fracturation hydraulique en plusieurs etapes) ont perm is la production commerciale du gaz partir des schistes. ce qui a auqmente les perspectives a long terme d'approvisionnement en gal nature! en Amerique du Nord. Depuis plus de 60 ans, I'industrie stimuler la production petroliere en Amerique du Nord utilise en toute securite et qazlere dans les reservoirs conventionnels.
la fracturation



pour plus de

Si I'exploitation du gaz de schiste est une industrie relativement bien etablle aux Etats·Unis (qui cornptent 40 000 puits en production), elle n'en est encore qu'a ses premiers pas au Canada.

Foire aux questions
Qui reglemente I'exploitation
En vertu de la constitution retrouve sur leur territoire,

du gaz de schiste'?
des ressources naturelles qu'on

canadienne, les provinces sont propnetaires et gestionnaires et elles en reqlemsntent les activites d'exploitation.

Quel est Ie role de Ressources naturelles Canada dans I'exploitation
Ressources naturelles Canada fournit des rense[gnements d'exploration, de gestion des ressources et de protection qeoscientifiques utiles de I'environnement.

du gaz de schiste?
de decisions en matiere

a la prise

Pourobtenir de, renseignements sur les droits de reprcduction, veuillez comrneruque. aveclravaux publics et Services gouvernementaux Canada (TPSGCl. par telephone au 613:995-6886au par cournel 11 I'adressesuivante: droitdauteur.copyright@tpsgc·,
© Sa Majeste 103 eine du chef du Canada, 2011 R N' riP rat, MlIi4·3fS·201O {imorimel

N° de cat. M164·3/S·2010f-PDF

(En ligne)



Panicr Itc\'d


Geology of shale gas hll North America
Shale gas represents a growing segment of natural gas production in North America. The rapid Increase in this type of unconventional gas production is accompanied by exploration projects in a growing number of sedimentary basins in the United States and Canada. For example, various stages of shale gas exploration activities are underway in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia. The assessment of shale gas potential has led to a complete redrawing of the North American energy map.


Potential shale gas-producing the North American shield. • These units of fine-qralned sedimentary rocks called shale originally had high organic matter content, which has been transformed into natural gas. • Significant differences exist between units with shale gas potential, particularly with regard to their age, mineralogy and thickness and the respective proportion of free gas (present in fractures and nanopores) and adsorbed gas (fixed to the surfaces of organic molecules and days). • The natural gas is either of deep, thermogenic origin (derived from the thermal transformation of liquid hydrocarbons on burial) or of shallow biogenic origin (derived from the near-surface decay of organic material by bacteria). units exist In many sedimentary basins surrounding


..... -+---Source: Modiff@d by Z'iff Enersy Group end tne N.ational Energy B03fd (:2.005)

Hayn.,ville \ eogleford

Frequently asked questions
How Is shale gas formed?
Hydrocarbon systems are composed of three key elements: a source rock rich in organic material, a reservoir rock characterized by variable porosity and permeability and a cap rock that acts as a seal. Shale gas is an unconventional in which ali three elements of a hydrocarbon system are found in a single rock unit. Artificial stimulation techniques system specific

to this type of hydrocarbon system are needed to increase gas flow to commercially viable rates because of the very low permeability of these shales.

Why was shale gas not developed in the past?
Shales that host gas have very low permeability, which reduces their ability to naturally flow gas. The extraction of gas at commercially via ble rates has become possible only because of the recent combination and multistage hydraulic fracturing. The repeated fracturing allows the release of economic volumes of natural gas.
For information regardi~g reproduction rights. contact Public Works and Government Services Canada at 613·996·6886 or at copyrignt.droitdau eur@pwgsc· © Her Majesty the Queen in Right of Canada, 2011
roT N"

of two techn iques: horizontal drilling section

of the rock volume adjacent to the well bore's horizontal

M I fi4-i/1-7010


Cat No. M164·3/1·201 OE·PDF (On-line)


~"''''\r*'l t1 ~




Geologie du gal de sehiste en Amerique du Nord
Le gaz de schiste represents une part croissante de la production de gaz nature! en Amerique du Nord. L'augmentation rapide de la production de ce type de gaz non traditionnel se traduit par un nombre croissant de travaux d'exploration dans les bassins sedimentaires aux Etats-Unis et au Canada. A titre d'exemple, des actlvites a divers stades d'exploration sont rnenees en Colombie-Britannique, en Alberta, en Saskatchewan, au Manitoba, en Ontario, au Quebec, au NouveauBrunswick et en Nouvelle-Ecosse. L'evaluation du potentiel du gaz de schiste a conduit a une reconfiguration complete de la carte energetique a l'echelle du continent nord-america in.


Faits importants
• Exten,ion des casslns de schlste du Devoni"n et Mis,i"ipien





• Des depots rocheux ayant un potentiel ont ete repertories dans de nombreux du bouclier nord-america in.

de production de gaz de schiste bassins sedimentalres en bordure




Montney (gaz de formation Impermeable)"



• Ces depots rocheux formes de roches sedimentalres a grains fins, appeles schistes presentalent a I'origine des teneurs elevees en carbone organique qui s'est transforms en gaz naturel, • II existe des differences importantes entre les schistes ayant un potentiel gazeifere, notamment par rapport a I'age, a la rnirrer aloqie, a l'epalsseur et a \a proportion respective de gaz libre (present dans les fractures et les nanopores) et de gaz adsorbe (fixe a la surface des molecules organiques et des mineraux argileux).

SOl.lrci:!o: Adaptation



doe Ziff



et j'Offke


de I',fr:ergle (2008)

• Le gaz naturel est soit d'origine therrnoqenlque profonde (issu de la transformation thermique d'hydrocarbures liquides et de rnatieres organiques lars de I'enfouissement), soit d'origine bioqenlque peu profonde (issu de la degradation, pres de la surface, de la matiere organique par des bacteries).

Foire aux questions
Comment Ie gaz de schiste se forme-t-il?
Les systernes d'hydrocarbures sont constitues de trois elements cles : une roche mere riche en matiere organique, une roche reservoir caracterisee par une porosite et une perrneabilite variables et une roche couverture qui agit comme un scellant. Le gaz de schlste est un systems non conventionnel ou ces trois elements sont reunis dans une rnerne unite rocheuse. En raison de la tres faible perrneabllite de ces schistes, 11est necessaire de recourir a des techniques de stimulation artificielle proprss a ce type de systerne d'hydrocarbures pour augmenter Ie debit de gaz a un volume commercialement viable.

Pourquoi Ie gaz de schiste n'etait-il pas exploite par Ie passe?
Les schistes qui renferment Ie gaz naturel sont tres peu permeables, ce qui limite la circulation naturelle du gaz. t'extraction du gaz a un debit commercial viable n'a ete rendue possible que grace ala combinaison recente de deux techniques: Ie forage de puits horizontaux et les precedes de fracturation hydraulique en plusieurs eta pes. La fractu ration repetee du volume rocheux jouxtant la portion horizontale du puits permet la Ii beration d'un volume econornlque de gaz nature!.
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Shale gas exploration techniques
Exploring for shale gas requi res traditional petroleum exploration methods combined with specialized studies unique to shale gas deposits.

Key facts
and 3D seismic reflection profiles continue to be indispensable tools for characterizing the geometric parameters of exploration sites, such as the depth and internal variations within a shale deposit.

Drilling is essential for ascertaining the host rock's physical and chemical characteristics and assessing the quality and quantity of the resource.
The initial assessment of shale gas potential includes a study of such parameters

as organic-material

content and

nature, thickness, thermal maturity and the geometry of the succession. • Among the studies specific to shale gas exploration, the mineralogical and geotechnical characterization of the unit that controls its ability to undergo hydraulic fracturing is essential. Quantification of the respective portion of free gas (in fractures and nanopores) and of adsorbed gas (fixed on organic molecules and clays) is equally important. Pilot projects are generally carried out to demonstrate the economic viability of development.

Frequently asked questions
What are the effects of a seismic survey'?
During a ground seismic survey, the reflection along rock planes of acoustic waves generated by vibrator trucks or small buried dynamite charges is recorded. Except for the small noise and vibrations generated during the procedure, a seismic survey has no effect on farming, forestry or other human activities.

How long could exploration last before the development phase?
The time needed to develop shale gas ranges from a few years to more than a decade. Shale gas exploration in the United States shows that the learning curve varies widely from one sedimentary basin to another. Experience has shown that the parameters for optimum hydraulic fracturing (drilling orientation, fluids used, etc.) are specific to each shale deposit. Therefore, the pace of development depends largely on technological outcomes.

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Techniques d'exploration
L'exptoration du gaz de schiste fait appel pour ce type de gisement.

du gal de schiste
d'exploration petrollere classiques et

a des


a des



Faits importants

Les ieves bidimensionnels et tridimensionnels de sismique-retlexion demeurent des outils de premiere necessite pour etablir les parametres geometriques des sites d'exploratlon, notamrnent la profondeur et res variations a l'lnterleur d'un depot de schiste. les csracterlstiques physiques et chimiques de la roche h6te


Le forage est une methode indispensable pour determiner et evaluer la qua lite et la quantite de la ressource.

" "

La phase initiale de l'evaluatlon du potentiel gazier du schiste comporte l'etude de parametres, tels que la teneur matiere organique et Ie type, l'epaisseur, la maturation thermique et la geometrie des successions. Parmi les etudes propres


a I'exploration

du gaz de schiste, la caracterisation


et geotechnique

du schiste

controlant sa capacite a subir une fracturation hydraulique s'avere essentielle. La quantification de la part respective du gaz libre (dans les fractures et les nanopores) et du gaz adsorb€! (fixe sur les molecules organiques et les argiles) est egalement importante. Des projets pilotes sont en general entrepris pour demontrer la vlabllite economique de I'exploitation .

Foire aux questions Quels sont les effets des leves sismiques?
Au cours des leves sisrnlques, on enregistre la reflexion Ie long des plans rocheux des ondes acoustiques generees par des camions vibrateurs ou par l'axploslon de petites charges de dynamite enfouies dans Ie sol. A l'exception du taible bruit et des vibrati ons prod u ites, Ies Ieves sis m iq u es so nt co ns ideres com me sa n s con sequ ence su r les act ivltes h u rna in es, agri co 1es et forestleres,

Combien de temps peuvent prendre les travaux d'exploration avant la phase d'exploitation1
" peut s'ecouler de quelques annees

a plus



entre la phase d'exploration que les parametres

et I'exploitation

proprement varie fortement


du gaz de schiste. L'exploration d'un bassin sedimentaire (orientation des forages, rythme d'exploitation

du gaz de schlste aux Etats-Unis montre autre. II s'avsre notamment tributaire

que la courbe d'apprentissage pour une fracturation gisement

a un

fluides util ises, etc.) sont pa rticuliers

a chaque


optimale Ie

de gaz de schlste, Par consequent,

est done largement

des resultats technologiques.

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?"t''"~~: cal r.pi« ('!



Shale gas drilling and fracturing techniques
Shale is a low permeability rock, and gas found horizontal drilling and hydraulic fracturing. in it can be produced economically in commercial quantities only by using

Key facts
To increase the volume of shale in contact with the well bore, a vertical wei! is initially drilled from the surface and progressively deviated horizontally through the target rock unit. The horizontal section of the well bore is usually from 1 to 3 kilometres (km) long. • After drilling is completed and multiple layers of metal casing and cement are placed around the well bore, a fluid is in] ected under high pressure to crack the shale, increase the permeability of the rock and ease the flow of natural gas. Horizontal drilling is now a standard method for extracting gas from shale, because It allows the hydraulic fracturing

to be concentrated on a single rock unit and considerably increases the volume of fractured material along the well bore. After the hydraulic fracturing, the horizontal and vertical sections of the well bore act as a drain for th e gas. • Hydraulic fracturing is caused by injecting pressurized water that is usually mixed with a small volume of sand and additives. Multistage hydraulic fracturing makes it possible to considerably increase the permeability of gas-rich rock units at the periphery of the horizontal well bore, because it creates small fractures that extend vertically between 100 and 200 metres (m) at the most.

Frequently asked questions
How does hydraulic fracturing work?
During hydraulic fracturing, pressurized water is injected into the rock unit. Sand (proppant) is added to the water during hydraul ic fracturing to prevent the artificially created micro-fractures from closing under the force of the high pressures that exist at great depths. The fractures thus remain open and allow the gas to escape. Additives (generally representing less than 1 percent of the fluid injected) are used for several purposes, mostly to increase the viscosity of the injected flu Id, optimize post-fracturing water recovery or protect the production pipe casing from corrosion.

At what depth is hydraulic fracturing carried out?
The depth depths of shale deposits varies enormously. For example, in the St. Lawrence Lowlands, the Utica Shale is present production at


from 500 m (in the west) to more than (between 1 and 3 km), because Hydraulic fracturing

3000 m (in the east). In general, in situ high-pressured


occurs where

shale is deeply buried in the subsurface.

rocks are needed freshwater

to help with gas movement aquifers.

is permitted

only well below the deepest

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Techniques de forage et de fracturatlon pour Ie gaz de schiste
a la fracturation
Les schistes sont des formations rocheuses hydraulique pour extraire

a faible

nerrneablllte: iI faut recouri r au forage de puits horizontaux et de fa~on economioue et en quantite commerciale Ie gaz qu'ils renferment.

Faits importants
Pour augmenter progressivement trois kilometres.
le volume de schiste en contact


a l'horizontale

avec Ie forage, un puits vertical est initialement fore pu is est dans la formation rocheuse cible, la recoupant sur une distance de un a

• •

Une fois que le forage est terrnine et que plusieurs couches de tubage rnetallique et de ciment ont revetu les parois du puits, un fluide est injecte sous haute pression pour fracturer Ie schiste, augmenter !a permeabilite de la roche et faciliter la circulation du gaz naturel. Le forage horizontal est desorrnals la methode usuelle d'extraction du gaz de schiste, car elle permet de concentrer la fracturation hydraulique sur une partie spedfique du schiste et d'augmenter considerablement Ie volume de roche rracturee le long du putts, Apres la fracturation hydraulique, les sections horizontales et verticales du puits de forage servent de drain pour Ie gaz. La fracturation hydraulique se fait par ['injection d'eau sous pression contenant normalement de faibles volumes de sable et d'additifs. La fracturation hydraulique en plusieurs etapes permet d'augmenter sensiblement la perrneabiiite des formations rocheuses riches en gaz a la peripherie du puits horizontal. puisqu'elle provoque de petites fractures qui se propagent verticalement de 100 a 200 metres au maximum.

Foire aux questions
Comment fonctionne

la fracturation hydraulique?

La fracturation hydraulique consists a injecter de I'eau sous pression dans la roche. L'ajout de sable (agent de soutenernent) dans I'eau pendant Ia fracturation hydraulique a pour but d'ernpecher les microfractures creess artificiellement de se refermer sous ('effet des fortes pressions exercees en profondeur. Ainsi, Ies fractures demeurent ouvertes et permettent au gaz de s'echapper, L'ajout d' additifs (representant en general moins de 1 p. 100 du f1uide injecte) a plusieurs buts, principalement d'augmenter la viscosite du fluide injects. d'optimiser la recuperation de I'eau postfracturation et de prcteqer Ie tubage de production de la corrosion.


quelle profondeur la fracturation hydrauJique est-elle effectuee?

La profondeur des depots de schiste varie enormernent. A titre d'exemple, dans les basses-terres du Saint-Laurent, l'Utica est situ€: a des profondeurs comprises entre 500 metres (a I'ouest) a plus de 3 000 metres (a l'est), En regie generale, on entreprend la production economique dans les endroits au les schistes sont profondernent enfouis (entre un et trois kilometres) puisque la surpression des roches en place est necessaire a la circulation du gaz en subsurface. La fracturation hydraulique est autorlsee uniquement a des profondeurs bien en dessous des plus profonds aquiferes d'eau douce.
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© Sa Majeste la Reine du chef du Canada, 2011 N'decat. M164-314-2010 (lmprlrne) N'de cat. Ml_~~-~~:~~l?f.PDF (En ligne)

t.,#",,\ ~;



p,p;<t 'ocyd,


Economic impact of shale gas

and provide affordable

The development of shale gas has the potential to make significant economic contributions and relatively clean energy for Canadians. Economic benefits include lease and royalty payments to the provincial governments that own the resources •

macroeconomic benefits including improved employment, investment, tax revenues and trade balances, with a reduced dependence on imported energy

Key facts
• • • The oil and gas sector Is a major contributor to the Canadian economy, currently contributing direct and indirect jobs across Canada. more than 500 000

The Canadian Energy Research Institute anticipates that the oil and gas Industry will contribute more than to the Canadian economy over the next 25 years. In 2008, the oil and gas industry paid more than $28 billion in royalties to provincial governments.


Provinces: for example, Quebec
• •

Upstream oil and gas development has invested more than $200 million in Quebec since 2007. Quebec spends approximately $2 billion per year importing natural gas to meet 11 percent of its energy demand.
At current consumption

rates, and given estimates of shale gas resources, Quebec could have sufficient natural gas

for decades.

Frequently asked questions
What is the estimated value of Quebec's Utica Shale gas resource'?

With an estimated recoverable resource between 18 and 40 trillion cubic feet' if fully developed, Quebec's shale gas deposits would have a market value2 between $70 billion and $140 billion at current natural gas prices.

How do governments

affect the pace of shale gas development?

Federal and provinci al governments seek to provide efficIent regulatory and competitive fiscal frameworks to attract investment. Provinces may tailor their royalty structure to attract shale gas development. Final investment decisions are taken by private industry. Provincial governments are responsible for regulating the various exploration and production phases in order to respect the environment and other societal concerns in areas of industrial interest.
, Le del'eioppement du gaz de schiste au Quebec - Document technique, 15 septembre 2010, rninlstere des Ressourm naturelles et de la faune. Assuming market value of $4Igigajoule, to current prices eastern Canada. close in


For information regarding reproduction rights. contact Public INorks and Government Services Canada at 613-996-6886 or at copyright.drcitdauteur@pwgsc·

HerMajesty the QueEn

in Right (Print)

ofCanada, 2011
Cat No. M I 64-3IE-20tOE-PDF (On·line)

Cat. No. M160/6·2010

du gaz de schiste
L'exploitation relativement Ie paiement de concessions

Retombees economiques de l'exploitation
du gaz de schiste peut generer des retombeas economiques conslderablss et fournir une enerqie propre et abordable aux Canadiens, Les avantages economlques comprennent notamment : et de redevances aux proprletalres des ressources, salt les gouvernements des investissements, importee. provinei aux; des recettes d'emploi,


les avantages rnacroeconomlques, dont l'amelioratlon des perspectives fiscales et des balances commerciales, et la reduction de la dependance

a l'enerqie

Faits importants

• • •

le secteur des hydrocarbures constitue l'un des pillers de I'economie 500 000 emplcis directs et indirects a l'echelle du pays.


il procure injectera


plus de

le Canadian Energy Research Institute prevoit que Ie secteur des hydrocarbures dans l'econornie canadienne au cours des 25 prochaines annees. En 2008, ce secteur a verse des redevanees totalisant

plus de 3,5 billions de dollars provinciaux.

plus de 28 milliards de dollars aux gouvernements

Provinces: Ie Quebec par exemple
• • • Depuis 2007, I'activite au Quebec.
petroliere et gaziere

en amont a genere

des investissements

de plus de 200 millions de dollars de gaz naturel, pour

Le Quebec debourse annuellement environ deux milliards de dollars pour ses importations repondrs a 11 p. 100 de la demande d'enerqie de la province.

Au rythme actual de consommation, et compte tenu des estimations des ressources en gaz de schists. Ie Quebec pourralt disposer de suffisamment de gaz nature! pour repondre a ses bssolns pour des decennies,

Foire aux questions
Quelle est la valeur estimative Quebec?

des ressources en gaz de schiste de la formation d'Utica, au

La ressouree recuperable etant estimee entre 18 et 40 billions de pieds cubes', la valeur marchande- des dep6ts de gaz de schiste quebecols pourrait oseiller entre 70 et 140 milliards de dollars 5i elle est exploitee a son plein potentiel aux prix actuels du gaz nature!.

Quel est Ie role des gouvernements


du gaz de schiste?

Les gouvernements federal et provindaux s'efforcent d'etablir des cadres regiementaires et financiers efficaces et concurrentiels afin d'attirer les Investisseurs, Les provinces ont le pouvoi r d'adapter leur regime de redevances dans Ie but de stirnuler Ie developpernent de cette in dustrie. les decisions finales quant a I'investissement sont prises par Ie secteur prive. Les provinces sont responsables des reglements sur les diverses phases d'exploitation et de production, I'envlronnement et les autres preoccupations socletales des secteurs d'interet industriel. en vue de proteqer

1 te de'le/oppement du gal de schiste au Quebec - document technique, Ie 15 septernbre 201 D, mintstere de, Re,sources naturelleset de la Faune, lEn supposant une valeur rnarchande de 4 $Igigajoule, e qui se rapprothe dES prixactuels dans l'Est canadien. c

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© Sa Majeste la Reine cu chef du Canada, 2011 N'decat. M 164,3/6·201 0 (Imprime) ~:~~ :~::


(En ligne)


"""\ ~J r.p""'cyd' (f..; CJt.


Geology of shale gas i Quebec
Shale gas exploration has reached an un precedented level in Quebec, with industry reporting from exploration wells in the St. Lawrence Lowlands area. initial high production rates

Key facts

The Utica Shale holds tremendous potential for producing although it has not been demonstrated yet. The Utica Shale is defined


gas. The overlying

unit also has shale gas potential,

by age (about 460 mill ion years) and lithology. Simi lar rock units are present and Labrador in the north. The actual explored River, from Quebec to upstate New York.

from North

Carolina in the south to Newfoundland to the south shore of the St. Lawrence •

domain for this unit is limited

This shale is sporadically exposed at surface along the St. Lawrence River's north shore between Quebec and Trois-Rlvieres and is buried at progressively greater depths eastward. It is relatively rich in organic carbon (e.g. plant and animal matter) and is generally mineralogy
100 to 200 metres

thick. content (e.g. carbonate rocks Include limestone)

The Utica Shale has a different

with higher carbonate shale gas deposits

and is older than most other North American

Frequently asked questions
When was the Utica shale gas potential discovered?
The presence of natural gas in the Utica Shale has been known for several decades. Geological research and exploratory drilling for deeper conventional hydrocarbon reservoirs documented high organic-carbon content and significant gas kicks in the Utica Shale. However, gas flow rates were considered too low for commercial viability. Technological advancements in recent years increased the economic viability of exploring for shale gas in Quebec.

Is there potential for discovering liquid hydrocarbons?
Liquid hydrocarbons include natural gas I iquids or condensates - such as ethane, propane and butane - and liquid oils. Th e re is potentia I for d iscove rin g Iiqu id h yd roca rbo ns, a Ithoug h it is restricted to na rrow zo n es near th e su rface. For most of the St. Lawrence Lowlands, the Utica Shale was burled under more than 5 kilometres of sediments. At these depths, the temperature is sufficient to convert organic matter and liquid hydrocarbons into gas. More than 350 million years of erosion have brought the Utica Shale to shallower depths, making the gas accessible.

For information regarding reproduction rights,contact Puhlic Works and Government Services Canada aI613·996-6886 or at © Ker Majesty the Queen in Right of Canada, 20 \ 1 Cat. No. M164·3/2-201O (Print) Cat No. M164'3/2-201 DE· (On·line) PDF

Geologie du gaz de schlste au Quebec
t'exploration du gaz de schiste a atteint un niveau sans precedent au Quebec, selon les declarations de I'industrie etat de taux initiaux de production eleves de gaz extra it des putts sltues dans les basses-terres du Saint-Laurent. qui font

Faits importants
L'Utica a un enorrne potentiel de production de schiste, quoique encore non dernontre. de gaz nature!.
t'unite sus-jacente a egalement

un potentiel

de gaz

L'Utica se definit par I'age (environ 460 millions d'armees) et par sa composition. On constate que des unites rocheuses similaires s'etendent de la Caroline du Nord au sud a Terre-Neuve-et-Labrador au nord. Le domaine actuellement explore pour ses schistes se limite a la rive sud du fleuve Saint-Laurent, entre la ville de Quebec et Ie nord-ouest de l'Etat de New York. • On trouve cette unite de schiste de fa\on sporadique en surface Ie long de la rive nord du fleuve Saint-Laurent, entre Quebec et Trols-Rlvleres, et plus profondernent enfouie, a mesure qu'on s'eloiqrie vers l'est. Cette unite de schiste est relativement riche en carbone organique (p, ex., matiere vegetale et animale) et a generalement une epaisseur de 100 ell 200 metres. L'Utica se distingue par sa rnlneraloqie, avec une teneur plus el evee en carbonates (p. ex., roches carbonatees telles que le calcaire) et est plus vieux que la rnajorite des autres gisements de gaz de schlste en Amerique du Nord.

Foire aux questions
Quand a-t-on decouvert Ie potentiel gazeifere de I'Utica?
On connalt I'existence du potentiel gazEMere de l'Utica depuis plusieurs decennies. Les travaux de recherche en geologie et les sondages d'exploration a la recherche de reservoirs enfouis plus profondernent, qui contiennent des hydrocarbures traditionnels, ont documents une teneur elevee en carbone organique et des sursauts de pression considerables de gaz dans l'Utica. Cependant, Ie debit de gaz etait juge trap faible pour presenter une valeur commerciale. Les proqres technolagiques des dernieres annees ont accru la viabilite economique de l'exploratlon du gaz de schlste au Quebec.

A-t-on evalue Ie potentiel pour la decouverte d'hydrocarbures liquides?
Parmi les hydrocarbures Ilquldes, il ya les liquides de gaz naturels ou condensats, tels que l'ethane, Ie propane et Ie butane ainsi que Ie petro Ie liquide. On a dernontre que Ie potentiel de decouverte d'hydrocarbures liquides existe, mais se Iimite a des zones etroites SUperficielles. Dans l'ensernble des basses-terres du Saint-Laurent, l'Utica a ete enfoui sous plus de cinq kilometres de sed iments. Aces profondeurs, la temperature est suffisante pour convertir en gaz la matiere organ ique et les hydrocarbures liquides. Plus de 350 millions d'annses d'erosion ont contribue ell ramener l'Utica a des profondeurs plus accessibles pour en faciliter I'exploitation.

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Minister of Natural Resources
Ottawa. Canada

Ministre des Ressources naturelles

OCT 2 0 ZOl1
MIN {!S EDU 2011-IJ.vL(8CJ

Mr. Dave R. Collyer President Canadian Association of Petroleum Producers 21 00, 35 0--7th Avenue Southwest Calgary, Alberta T2P 3N9
Dear Mr. Collyer:

Thank you for your letter of September 6, 20 II, regarding the measures that the Canadian Association of Petroleum Producers (CAPP) is pursuing towards enhancing the efficient, safe and responsible development of shale and tight gas. As mentioned in my recent speeches, 1 anticipate that the natural gas industry will play an increasingly important role fulfilling Canada's future energy requirements and opportunities. I appreciate the efforts that CAPP is undertaking in achieving the responsible and sustainable development of shale and tight gas in Canada. Natural Resources Canada (NRCan) has created a shale gas Horizontal Task Team (HIT) whose mandate is to harness and better align NRCan knowledge and expertise in science, policy and programs to support the sustainable development of shale gas and shale oil resources. NRCan's HIT has published five-shale gas fact sheets. I appreciate the work underway with CAPP to develop a better understanding of life cycle greenhouse gas emissions for shale gas. NRCan is committed to increasing education and outreach with respect to shale gas. My department recently led a trade mission to Asia to promote the liquefaction and export of Canadian shale gas resources. Similarly, we are engaging Asia Pacific nations through bilateral and multilateral forums. For example, this summer NRCan hosted and actively participated in an Asia-Pacific Economic Cooperation workshop On North American shale gas. My officials are also speaking at shale gas conferences to help disseminate accurate information, and to reiterate NRCan's support for responsible and sustainable shale gas development.



_]I •• nnnn"J-t

-2Natural gas is an important part of Canada's energy mix that can help achieve our energy and environmental objectives. 1 want to thank you for your commitment and effort to publishing the guiding principles for hydraulic fracturing for shale and tight gas production. I further look forward to hearing more about the specific recommended practices currently being developed. Again. thank you for writing. Yours sincerely,
Original Signed by HON. Joe OUver a slgne I'origlnal

The Honourable Joe Oliver, p.e., M.P.




o .....




Page 1 of2 Power Stacey


Foran, John November-07-11


AM Piercey, Christopher; Akins, Bruce; Dillabough, Ellen;


Power, Stacey; Cowan, Dan; Konza, Valentin; Bazinet, Lisanne; Mahmuti, Visar FW: NRCan visit


From: Foran, John

Sent: November 7,2011 09:37 To: 'Guy, Kerry'
Cc: Leyburne, Drew; Heath, Douglas; Labonte, Jeff

Subject: RE: NRCan


Kerry -, and my team would be happy to meet with you to discuss various issues. I am cc'ing Drew Leyburne and Doug Heath (Directors of Frontier Lands Management and Oilsands Divisions, respectively, who may also be interested in meeting separately wi til you. Both are in the same branch as me - the Petroleum Resources Branch, which is in turn part of the Energy Sector. Our branch DG is Jeff Labonte. Regarding the Shale Gas Horizontal Task Team (HIT), I am the Director-level lead on that one, along with Shannon Nix. We prepared that note the Minister sent to Dave. Dan Cowan and Stacey Power of my group are also on the Secretariat for that exercise, so we have all the background, and can fill you in. The Shale gas GHG analysis project which you are helping Derek McCormack it would be good for you and I to meet together with Derek to discuss. with is being done for that HTT, so

We can start setting up a few meeting slots once you have a better idea of your schedule. We could starta have y" hr with y" or so to discuss the HTT, leading into a meeting with Derek for the GHG study.

We are interested in stakeholders' positions. My group also has responsibilities for pipelines, and while NEB rate case decisions do not require approval of the Minister of NRCan or Cabinet, my group will no doubt receive numerous requests from senior NRCan management for briefings on the status of this S.20(1)(b)issue over the next months. Accordingly, we are preparing for that by consulting with stakeholders. s.20(1)(C)And if you need some lime with Doug or Drew, you could set that up as well.

Finally, the group responsible for tax and fiscal analysis at NRCan is the Energy Policy Branch (also in Energy Sector), specificatly the Economic and Fiscal Analysis Division, whose Director is Phyllis Odenbach·Sutton. f you want to set something up with Phyllis on this, you can reach her at

From: Guy, Kerry (]



November 4, 201117:20 Foran, John Subject: NRCan vlslt sure

John, not


you would



one to talk to about this .. not exactly familiar on November

with how NRCan is organized

but I will be in Ottawa



for some


and a


Day. I was wondering


there would be some value in me extending I plan on asking Derek

by a day to November

30 and meet with NRCan on some topics. - should be close to being



value in seeing where we are on the GHG LeA project



Page 2of2

finished. Also, in a letter that Minister Olive sent to our president, Dave Collyer. He mentioned that NRCan had established a shale gas Horizontal Task Team (HTT)? I wonder if you could direct this e-mail to the owner of th is project? I'd like to request a meeting with them about this to see if industry can be of any assistance in this project and to also gain some info as to the scope and mandate of this team. Additionally, might be good to see what else NRCan has In the pipeline and I can share some other projects that CAPP is intending to work on n 2012. There may be other areas where we have an alignment of work such as the GHG LeA project. Hope you have a good weekend.

Kerry S. B. Guy, P. Eng. Manager, Natural Gas Advocacy
Canadian Association of Petroleum Producers

2100, 350 - 7th Ave. SW Calgary, Alberta, Canada T2P 3N9 Phone: (403)267-1188 Cell: (403)589-8126 Email: Please Note / Veuillez noter: This communication is intended/or the person or entity to which it is addressed and may contain confidential and/or privileged information. If you have received this communication in error, please contact the sender immediately and delete all copies. Cette communication est reservee a l'usage de la personne a qui elle est adressee et peut contenir de l'information co nfiden tielie et privilegee. Si vous avez recu cette communication par erreur, veuillez immediatement communiquer avec son expediteur et detruire toutes les copies.





Between 2000 and 2007, North American natural gas prices were both rising and volatile as concerns mounted over declining domestic production. Forecasts pointed to steadily increasing natural gas prices which drove industry proponents to consider new supply options including arctic gas and importing liquefied natural gas (LNG) from overseas. In more recent years, technological advancements have dramatically improved the outlook for domestic natural gas supplies, particularly from shale and tight gas formations. Rapid growth of North American natural gas production, mostly from shale gas, resulted in prices falling from 7.73 Canadian dollars per gigajoule (C$/GJ) in 2008 to 3.53 C$/GJ in 2011, a decrease of more than 54% from 2008 (in nominal terms). Natural gas prices remain very low (average year to date price of2.68 C$/GJ in 2012) in absolute terms, and also relative to crude oil. Traditionally, low prices lead to lower drilling and reduced supply. This has not occurred in the current environment. Natural gas production in Canada through November 2011 is down just 1% over production at this time last year. Meanwhile, marketable natural gas production in the U.S. grew by an estimated 4.5 Billion cubic feet per day (Bcf/d) or 7.4 percent in 2011, the largest year-over-year increase in history. Growth continues to be driven by increases in unconventional gas production. With current estimates of 100-200 years of natural gas supplies available, proponents are now considering exporting LNG out of North America. Attachment 1 provides details on Kitimat LNG and Attachment 2 provides details on BC LNG Export Co-operative and Douglas Channel LNG project.

Shale gas
Shale gas is natural gas trapped within shale, a rock type with low permeability. Once considered uneconomic to produce, technology has helped unlock enormous quantities of natural gas from shale reservoirs. Long-reach horizontal drilling combined with multistage hydraulic fracturing shatters shale rock formations thus allowing natural gas to flow. Though still in its infancy in Canada, the potential for shale gas development is enormous. Shale gas exploration is taking place across North America, however commercial development is currently limited to Northern British Columbia (Montney, Hom River), and the United States. (Attachment 3 provides a map of shale gas deposits).



Shale Gas Resource Estimates
In May 2010, the Canadian Society for Unconventional Resources (CSUR) released new resource estimates suggesting Canada's natural gas "in place" resource is almost 4,000 trillion cubic feet (tct)/about 712 billion barrels of oil equivalent (boe), With between

700 and 1,300 tef of marketable gas, the CSUR estimates 357 tef are conventional resources and between 376 tcf (low case) and 947 tcf'(high case) are unconventional resources. Most of the increased resource estimates can be attributed to shale gas. Attachment 4 summarizes CSUR's resource estimates.

Shale Gas Production Forecasts


Attach men! 5 provides the National Energy Board's Canadian natural gas production forecast, which predicts shale and tight gas to account for about 70% (12.8 bef/d) of production by 2035.

Regulations and environmental concerns
The drilling, testing and production of shale gas wells falls under provincial jurisdiction. Despite stringent regulations and enforcement measures, shale gas development continues to face environmental opposition, particularly in provinces unaccustomed to oil and gas drilling ..The chemical composition of hydraulic fracturing fluid, perceived risks of water contamination and the lifecycle greenhouse gas (OHO) footprint of shale gas development continue to attract negative attention. NRCan recently completed a lifecyc1e analysis of GHG emissions from shale gas production in northern B.C. in collaboration with the Canadian Association of Petroleum Producers (CAPP). Findings suggest that lifecycle GHG emissions from average shale gas production and use in Canada are approximately four per cent higher than conventional gas, ranging from one per cent lower to 10 per cent higher, depending on the carbon dioxide content of the shale gas reservoir. In late 201 i, Environment Canada commissioned the Council of Canadian Academies to provide an assessment on the state of knowledge of potential environmental impacts from the exploration, extraction and development of Canada's shal e gas resources. The assessment is expected to take 18 to 24 months to complete.

Provincial Updates
British Columbia - BC's Oil and Gas Activities Act came into effect in mid-2010 to respond to increased pressures on its regulatory system as well as to better regulate the new technologies employed in oil and gas production. In early February 2012, Be announced a provincial natural gas strategy with LNG exports being a cornerstone of the plan. The Province is committed to having their first LNG plant in operation by 2015 and three facilities operating by 2020.

New Brunswick - In late December 2011, NB Natural Resources Minister Bruce
Northrup provided an update on the province'S environmental protection plan for the oil and gas industry. Officials are conducting a review of evolving regulations in other


jurisdictions throughout North America; studying reports, critiques, scientific studies, monitoring results and model standards presented by academia, industry and nongovernmental organizations; and consulting with subject matter experts within the provincial government. The full plan is to be released in the Spring of2012.

Quebec - Natural gas drilling activity in Quebec remains limited, as the province
continues to conduct a strategic environmental review. As announced in March 2011, this review could take up to two years and will support the development of an improved regulatory framework.

Global Shale Gas
In April 2011, the U.S. Energy Information Agency (EIA) released a 365~page report estimating the potential for shale gas development in 48 basins in 32 countries around the world. The assessed shale gas basins could contain 6,622 trillion cubic feet (tcf) of natural gas. Attachment 6 provides complete shale gas resource estimates by country. The global estimates for recoverable shale gas resources are considered conservative. However, these estimates are uncertain given the relatively sparse data that currently exists. Efforts are underway to develop more detailed shale gas resource assessments by the countries themselves. Despite the magnitude of the EIA's estimates, commercial shale gas development outside of North America is likely to be at least 5 to 10 years away. Most countries lack the specialized horizontal drilling equipment and hydraulic fracturing expertise to exploit unconventional gas resources.

Contact: Stacey Power, (613) 992~1 023 (ES/PRB)



Attachment 1: Update on Kitimat LNG The $4.5 billion Kitirnat LNG terminal is a proposed project to liquefy natural gas for export to Asia. It would be located at Bish Cove near the Port of Kitimat, B.C and is anticipated to be in operation in 2015. At full capacity, the facility would transform 1.4 billion cubic feet per day (Bcf/d) of natural gas feedstock to 10 million tonnes of LNG per year (equivalent to about 250,000 barrels of oil per day). The terminal would receive about 150 LNG carriers per year at full capacity. The proposed $1.1 billion, 36-inch Pacific Trail Pipeline that would extend 463 kilometres from Summit Lake, B.C. to Kitimat would serve the Kitimat LNG terminal. The pipeline would transport up to 1.4 Bcf/d of natural gas. The project proponent is K1v1 LNG Operating General Partnership (KM LNG), for which Apache Canada, EOG Resources and EnCana Corporation each have an ownership interest. Both the Kitimat LNG terminal and proposed pipeline underwent provinciallfederal environmental assessments and were given the authority to proceed. They would both be regulated by the B.C. Oil and Gas Commission. An application to the Commission for regulatory approval of the Pacific Trail Pipeline is expected in 2012. The Kitimal LNG terminal requires various ancillary permits before construction and operations can begin. To facilitate market entry into Asia, KM LNG filed an application with the National Energy Board (NEB) for a long-term export licence on December, 2010 to export up to 10 million tonnes per year of natural gas. The NEB held oral public hearings in June and July 2011. On October 13, 2011, the NEB approved KM LNG's application for a 20-year licence to export liquefied natural gas to markets in Asia. In its Reasons for Decision, the NEB indicated it is satisfied that the quantity of gas to be exported does not exceed the surplus remaining after due allowance has been made for the reasonably foreseeable requirements for use in Canada having regard to the trends in the discovery of gas in Canada. The NEB also concluded that the proposed volume is unlikely to cause Canadians difficulty in meeting their energy requirements at fair market prices. On November 12,2011, the Prime Minister announced Canada's approval of the issuance of the licence to export LNG at the APEC Leaders Summit in Hawaii. The Kitimat LNG project continues to gain traction. The project's proponents are in commercial discussions with potential Asia-Pacific LNG customers. The partners expect to have finn sales commitments in place by the time a final investment decision is made in early 2012.



Attachment 2: B.C. LNG Export Co-operative (B.C. LNG) and Douglas Channel LNG Project There is a smaller-scale barged-based LNG project in Kitimat proposed by Douglas Channel Energy Partnership. The LNG facility would be located on the West bank of the Douglas Channel on private lands owned by Rio Tinto Alcan, within the District of Kitimat and the asserted traditional territory of the Haisla Nation. The facilities are designed in modules or trains, each capable of converting up to 125 million cubic feet per day (MMcf/d) of natural gas into approximately 900,000 tonnes of LNG per year. Each train can be added as a distinct project. The first train is intended to be completed in 2013. The number of carriers required to export the LNG is 1 per month per train. Natural gas would be transporled to the Douglas Channel LNG terminal on the existing Pacific Northern Gas Pipeline and potentially the Pacific Trail Pipeline, which is proposed to serve the Kitimat LNG facility. The LNG terminal would be regulated by the B.C. Oil and Gas Commission and subject to an Environmental Assessment (EA) at a screening level as required by Canadian Environmental Assessment Act (CEAA). Authorization under section 35(2) of the Fisheries Act from the Department of Fisheries and Oceans (DPO) will be required before the LNG facility can proceed. DFO is the only Responsible Authority under CEAA and will be responsible for preparing the EA screening. The project is not reviewable under the B.C. EA Act. The proposal to transport LNG will be subject to review within Transport Canada's Technical Review Process of Marine Terminal Systems and Transshipment Sites (TERMPOL). Douglas Chanel would sell the LNG to B.C. LNG for export to markets in Asia. On March 8, 2011 Be LNG filed an application with the NEB for a licence to export up to 1.8 million tonnes per year of LNG (equivalent to 250 million cubic feet per day (MMef/d)) for 20 years from Kitimat, British Columbia (B.C.) to markets in Asia. The NEB established the process for review as a Mitten public hearing, which ended on December 7, 2011. On February 2, 2012, the NEB issued its Reasons for Decision approving the export licence application. The NEB was "satisfied that the quantity of gas to be exported does not exceed the surplus remaining after due allowance has been made for the reasonably foreseeable requirements for use in Canada, having regard to the trends in the discovery of gas in Canada". The NEB also concluded that the proposed "volume is unlikely to cause Canadians difficulty in meeting their energy requirements at fair market prices".

Attachment 3: Shale Gas Resources in North America 5


__ -

;:h..allowa~~ 'iJ n\l~~l 'yo ntsrmennte depth a~e Deepest/old(!Sl

• Mh(~d shale ! cI1.3!~play •• Mf)"td shale -A Iimes1on~ pray
... Mixed sh a le.& ligtll dolostOl"t9-





shale ~Iays

S01J-.::-e:U,S, E;uHQj' trrorr-aeon UpQjted: 1iI")'"~. 2D11


10:"1ete tram \l!.riOIJ& pl,lti.~I".edl s."bJdeo. Canad3 r

and ....1!l":.;CO j)1~~

t~rn ARI.



Attachment 4: Natural Gas Resources in Canada

Marketable Natural Gas Resources
2010 2000

70 years of supply

700·1300 TeF" 10Q+years of supply
BCoalbed Methane • Offshore Coast

Conventional (W(SB)


.Shale: and Tight Gas

• Technology has greatly expanded Can ada's natural gas resource; base, which is constantly being re-assessed as new technology economic all, unlocks new resources. Source: CSUG and CGA • Canada is the world's 3rd larqsst natrral gas producer • Recent NEB I Be assessment of Be Horn Rive r confirms large resources




5: National Energy Board Natural GJ.s Production Forecast

Natural Gas Production by Type, Reference CaSE
Marketable production

Million m /d


Marketable production




500 400
300 15


200 5



Conve nlonol




Sol ution Ga s •

Nortne rn Terriferies


E!l fig ht •



Source: National Energy Board, Canada's Energy Future: Energy Supply and Demand Projections to 2035 (November 2011).



Attachment 6: Estimated Global Shale Gas Resources
China United States Argentina Mexico South Attica Australia Canada Libya Alger!a 8rall I Poland

1275 862

681 485


290 231 226 187

Norway Chile India Paraguay




83 64



Bolivia Ukreine Sweden

48 42 41


Uruguay U.K. Colombia

23 21


19 18 17 15 11


Nethe,'.nds Turkey
Venezuela Morocc.o



Western Sahara

8 7 4














MAR - 92012
Mr. Dave Collyer President Canadian Association of Petroleum Producers 2100, 350-ih Avenue South West Calgary, Alberta T2P 3N9 Dear Mr. Collyer:



2012- /~


Thank you for your letter of January 30, 2012, regarding the Canadian Association of Petroleum Producers' hydraulic fracturing operating practices for shale and tight gas development, which build upon the previously released "Guiding Principles for Hydraulic Fracturing ... By taking a proactive approach towards water management practices and reporting, I welcome the important effort that the industry is making to ensure and promote the responsible development of Canada's natural resources. Along with robust provincial regulations, this will help attract investment and support the diversification of our oil and gas export markets, a government priority which I have highlighted in a number of recent speeches.

Natural gas is an important part of Canada's energy mix that can help achieve our energy
and environmental objectives. I would like to extend my thanks to the industry for publishing and implementing the hydraulic fracturing operating practices for shale and tight gas development. Again, thank you for writing. Yours sincerely,

Original Signed by HON. Joe Oliver a signa I'orlginal

The Honourable

Joe Oliver, P.C., M.P.




March 2, 2012

Canada has significant natural gas resources, now estimated to represent over 100 years of supply ~ largely attributable to shale gas .. Resource development resides within provincial jurisdiction. Provinces own resources within their borders and are responsible for regulating their
develo prnent,


• NRCan plays a key role, as the home of the Geological Survey of Canada (GSC), in resource mapping and science.

The geoscience information provided by NRCan is used in making exploration, resource management, and environmental protection decisions by provincial governments, industry and other key actors. The BritIsh Columbia all and Gas Commission and the Alberta Energy Resources Conservation Board conclude that there has never been a proven case of groundwater contamination resulting from hydraulic fracturing in British Columbia or Alberta, the two provinces where most oil and gas drilling activity in
Canada occurs.




Shale gas is found in sedimentary rock formations that are characterized by very low permeability. Tight gas resources are also produced from low-permeability siltstones, sandstones, and carbonates that occur in close association, commonly interbedded with, a shale source rock.' In Canada, potentia! and producing shale gas resources are found in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia. Most of the current drilling and production activities are occurring in northeast British Columbia and parts of Alberta in the Montney and Horn River shale basins. The Montney formation spans a wide variety of depositiona! environments, from shallow-water sands in the east to offshore muds in the west. Estimates of natural gas in the Montney are high!y variable, ranging from 80 to 700 trillion cubic feet (tef) of gas in place. It should be noted that only a fraction of that (approximately 20 per cent) is likely to be recovered. The Horn River Basin (HRB) encompasses approximately 1.1 million hectares of land in northeastern British Columbia, north of Fort Nelson and south of the Northwest Territories border. Estimates of the total amount of shale gas resource in the HRB vary, but according to the BC Gil and Gas Commission, the average is approximately 500 tcf. Again, a smaller amount would be recoverable. In total, the Canadian SOCietyfor Unconventional Resources estimates recoverable natural gas resources in Canada (including conventional, shale, and tight resources) to fall within the 700 - 1,300 Tef range. Abundant supplies of shale gas in northern BC are spurring LNG export proposals out of the Kitimat region. Be's recently released natural gas strategy focuses on LNG exports, since they could help fuel the province's economy for the next decade.



Canadian Natural Gas Production • In 2010, 42.5% (equivalent to 2.16 Tcf) of all natural gas produced from the Western Canadian Sedimentary Basin (WCSB) originated from unconventional sources." The remaining 2.92 Tef (57.5%) of gas was produced from conventional sources. 'Given that both types of gas are contained in source rocks with low permeability, and are developed with the same technology (namely horizontal drilling and hydraulic fracturing), NRCan generally classifies them as the same. 2 National Energy Board, "Short-term Canadian Natural Gas Deliverability 2011-2013 - Energy Market

The National Energy Board's (NEB) latest Energy Futures modelling exercise predicts shale and tight gas to account for about 70% (12.8 bcf/d) of production 2035.3


Regulations and environmental


The drilling, testing and production of shale gas wells falls under provincial jurisdiction. Despite stringent regulations and enforcement measures, shale gas development continues to face environmental opposition, particularly in provinces unaccustomed to oil and gas drilling. The chemical composition of hydraulic fracturing fluid, perceived risks of water contamination and the lifecycle greenhouse gas (GHG) footprint of shale gas development continue to attract negative attention. In late 2011, Environment Canada commissioned the Council of Canadian Academies to provide an assessment on the state of knowledge of potential environmental impacts from the exploration, extraction and development of Canada's shale gas resources. The assessment is expected to take 18 to 24 months to complete. In the last 6 months the Canadian Association of Petroleum Producers (CAPP} has announced guiding principles and operating practices for hydraulic fracturing. These initiatives are designed to complement provincial regulations by improving water management and water and fluids reporting for shale gas and tight gas development across Canada.

Provincial •


British Columbia - BC's Oil and Gas Activities Act came into effect in mid-201 0 to respond to increased pressures on its regulatory system as well as to better regulate the new technologies employed in oil and gas production. In early February 2012 Be announced a provincial natural gas strategy with Liquefied Natural Gas (LNG) exports being a cornerstone of the plan. The Province is committed to having their first LNG plant in operatia n by 2015 and thre e faci Ii1ies operati ng by 2020. New Brunswick - In late December 2011, NB Natural Resources Minister Bruce Northrup provided an update on the province's environmental protection plan for the oil and gas industry. Officials are conducting a review of evolving regulations in other jurisdictions throughout North America; studying reports, critiques, scientific studies, monitoring results and model standards presented by academia, industry and nongovernmental organizations; and consulting with subject matter experts within the provincial government. The full plan is to be released in the spring of 2012. Quebec - Natural gas drilling activity in Quebec remains limited, as the province continues to conduct a strategic environmental review. As announced in March 2011,

Assessment"· nsi/rnrgynfmtn/nrgYlJlrt'ntrl gs/ntrlgsdJ vrb ity20 1120 13/ntrlgsdlvrb lty20 112013 -eng.htm 1. 3 National Energy Board, Canada's Energy Future: Energy Supply and Demand Projections to 2035 (November 201 I).


this review Gould take up to two years and wiU support the development of an improved regulatory framework.

Contact Person:

Stacey Power, 613.992.1023


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