Technology revolutionizing energy industry: experts

Technological developments in the past decade have had a dramatic impact on the North American energy sector, and made the future difficult to predict. But four energy experts gave it their best shot this week during Synergy Alberta’s annual conference in Red Deer.

Technological developments in the past decade have had a dramatic impact on the North American energy sector, and made the future difficult to predict. But four energy experts gave it their best shot this week during Synergy Alberta’s annual conference in Red Deer.

Susan Carlisle, director of alternative and renewable energy with Alberta Energy; Rick Marsh, senior adviser, reserves and resources, with the Alberta Energy Regulator; Dan Allan, executive vice-president with the Canadian Society for Unconventional Resources; and Mark Salkeld, president and CEO of the Petroleum Services Association of Canada, shared their perspectives during a forum on Canada’s energy future.

Allan described how energy companies’ newfound ability to extract oil and gas from tight geological formations like shale is revolutionizing the industry.

“Unconventional now is the dominant new energy source for North America,” he said. “Horizontal wells now account for more than 70 per cent of the wells being drilled in Canada.”

By combining horizontal drilling and hydraulic fracturing, companies can now drill into a tight underground zone and extract oil or gas from it for up to two miles, he said.

Salkeld emphasized how precise such operations have become.

“We could steer that (drill) bit in northeastern B.C. from right here in this room if we had the computer setup, and with a very significant degree of accuracy.”

The result is that previously uneconomical reserves have been transformed into high-producing plays.

Allan noted that just eight years ago, the United States was importing about five billion barrels of oil annually.

“It’s coming down by a billion barrels a year in the last few years,” he said, attributing this mainly to unconventional oil from the Eagle Ford and Bakken shale formations.

“Those two plays, one in Texas and one in North Dakota, have added close to two million barrels a day in U.S. production, and they’re ramping up.”

Marsh echoed Allan’s assessment of the United States’ resurgent oil sector.

“Their oil production is now back up to about 1990 levels.”

Alberta also has promising unconventional resource formations, said Allan, and bitumen from the oilsands is expected to continue to grow in importance.

The problem for Alberta has been that a spike in natural gas production has occurred in the United States — the province’s No. 1 energy customer. Our southern neighbour has been producing about 65 billion cubic feet (BCF) of gas a day the past few years — enough to satisfy its needs — and is believed to have the potential to ramp up to 100 billion cubic feet, said Allan.

This abundance of natural gas has driven prices below the cost of production. Marsh said Alberta was generating close to 14 BCF a day a little more than a decade ago; by 2022 the figure is expected to sink to eight BCF.

“The significant thing that will need to happen in order to boost activity back up again is higher gas prices,” said Salkeld.

And the only way to get higher prices is to tap into overseas markets, he added.

Allan is optimistic this will happen. There are currently 10 projects proposed or underway that would allow for the export of natural gas — such as West Coast liquid natural gas facilities — and just four could consume eight BCF a day.

“We’re going to make this happen, because it’s too important to Western Canada to not,” he said.

Carlisle focused on the outlook for renewable and alternative sources of energy. She said Alberta has been working hard to develop these — from solar and wind energy to biomass energy.

“I think it’s inevitable that the grid will be greener in the future,” she said of the province’s power supply.

“I think within the next five years or so there will be a breakthrough in storage technology that will make storage cheaper, and this will overcome a lot of the problems for wind or solar.”

Alternative transportation fuels, like natural gas and electricity, could grow in popularity, she added. And more people could generate their own electricity, and sell some into the grid.

Synergy Alberta is a non-profit organization that supports community-based groups with a stake in energy development. Its 2013 conference, which started on Monday, wraps up today.

hrichards@bprda.wpengine.com

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