Bitumen vs. Natural Gas Saga: Act II

When the Alberta Energy and Utilities Board issued General Bulletin GB 2003 - 28 this past July, which set out comprehensive bitumen conservation requirements to address the risk of natural gas production on bitumen recovery in the Athabasca oilsands area, it called for the shutdown of 938 wells by

As that deadline approached, a whopping 733 exemption requests were filed - nearly 80% of the total. But the EUB reports it shut in 338 wells - 41% of daily production or 95 million cubic feet of natural gas per day. That means 600 wells, representing 137 mmcf/d of gas production, were granted temporary exemptions.

A consortium of producers led by BP Canada Energy Company, Canadian Natural Resources Limited, Devon Canada Corporation, Paramount Energy Trust and ProGas Limited filed affidavits with the Alberta Court of Appeal to stay the EUB's shut-in order. The appeal claims the EUB overstepped its jurisdiction.

Calgary-based Paramount Energy Trust has turned off 43 gas wells, but has kept 222 wells open by filing for exemptions. Between eight million and nine million cubic feet a clay of gas output has been lost because of the shutdown, representing about 9% of the trust's daily production. Paramount cut its August distribution to 20 cents from 25 cents per unit, and there could be further reductions in future monthly payouts.

The EUB intends to decide the status of the all gas production within the area of concern by April 1, 2004. If any affected party objects to the proposed gas well status, the EUB will convene a hearing to address the concerns.

The Wabiskaw-McMurray area contains natural gas that is in contact with some of the highest quality bitumen resources in the province. As this natural gas is extracted, there is a drop in pressure within the gas pools. The EUB believes this leads to an unacceptable risk to bitumen recovery using thermal techniques, such as steam-assisted gravity drainage (SAGD). The EUB is of the view that there are currently no proven technologies that satisfactorily mitigate this risk.