The Duvernay shale play, covering almost 20 per cent of Alberta’s geography, holds a wealth of untapped potential.

It contains almost 77 trillion cubic feet of marketable natural gas, 3.4 billion barrels of marketable crude oil and 6.3 billion barrels of marketable natural gas liquids (NGLs), according to best estimates of the Canada Energy Regulator (predecessor NEB) and Alberta Geological Survey in their 2017 Duvernay Resource Assessment.

Yet fulfilling the potential of the Duvernay has been challenging.

“Early on in the exploration phase of the Duvernay its geology was often compared to the Eagle Ford shale play in south Texas,” says Darrell Stonehouse, technical media editor for geoLOGIC systems ltd., and author of the Daily Oil Bulletin’s new Delivery time in the Duvernay report.

“Current Eagle Ford production sits at 1.1 million bbls/d of oil and six bcf/d of gas, more than 10 times greater than the Duvernay.

Bad timing is one major reason for the slow development of the Duvernay, says Stonehouse. “Our data shows significant exploration began in the Duvernay in 2012, later than many other shale or unconventional plays that began in times of higher prices and easier access to capital.

“The oil market collapse in late 2014 brought exploration to a standstill. This was followed by volatile natural gas prices, and then the COVID-19 pandemic limiting exploration and development activity.”

Around 1,200 wells have been drilled into the Duvernay, with drilling focused on deep, liquids-rich gas in northwest Alberta and more recently shallow oil targets in the East Duvernay play in central Alberta.

Drilling and completions technology datasets used for the report show operators are making steady progress in moving towards a manufacturing model that has lowered development costs in other unconventional plays.

“The use of batch drilling is speeding up drill time on pads,” says Stonehouse. “The variation in lateral lengths, fracturing stages, and proppant intensity is narrowing across the play. But more work is needed, particularly around optimizing proppant use, to compete for capital with other unconventional plays.”

There has been a recent shift in ownership in the Duvernay, with Crescent Point Energy Corp. acquiring Shell Canada’s assets and Kiwetinohk Energy Corp. acquiring Ovintiv Inc.’s assets. This may drive further improvements as the new asset owners place a higher priority on Duvernay development.

“Both acquirers have past success in developing unconventional resources, with Crescent Point in the Saskatchewan Bakken oil play and the management team at Kiwetinohk developing the condensate-rich Montney play,” says Stonehouse. “XTO Energy Canada’s Montney and Duvernay assets are being marketed, adding to the potential for new entrants and investment.”

Higher and more stable oil and gas prices could provide an opportunity for new entrants and existing operators to advance into a more stable development pattern, enabling them to lower costs and improve Duvernay productivity.

“Our analysis shows an improved pricing outlook, combined with new entrants into the Duvernay, should drive increased activity in the play. We don’t anticipate a significant increase in production, however, as operators continue to build out optimal drilling and completions strategies while managing free cash flow with an eye to shareholder returns.”

To download the Delivery time in the Duvernay report, click here.