Situated about 150 kilometers northwest of Fort Nelson, the Liard Basin straddles the borders of the Northwest Territories and Yukon and British Columbia, where Apache has 100 percent working interest in 430,000 acres.
Apache’s early results from Liard are described as “the most prolific shale gas resource test in the world,” with net estimated gas sales expected to hit 48 trillion cubic feet (Tcf) of natural gas (8 billion barrels of oil equivalent) based on recent drilling, test results and well-control points.
Apache management spoke publicly about the discovery earlier this year and released drilling results during a June 14 Investor Day. During the presentation, John Bedingfield, Apache’s vice president of Exploration and New Ventures, described Liard as “the best shale gas reservoir in the world, certainly from a performance perspective.”
That perspective is backed by results from the D-34-K horizontal well drilled in 2010 to a vertical depth of 12,600 feet and a lateral length of 2,900 feet with six frac stages.
The 30-day IP rate was 21.3 million cubic feet (mmcf) per day, 3.6 mmcf per day per frac, with an estimated ultimate recovery (EUR) of 17.9 billion cubic feet.
“What’s really critical here is recognition of this resource,” Bedingfield noted. “What’s really staggering to me is that these wells should deliver between 60 to 70 billion cubic feet of sales gas per well bore, and that is exceptional.”
To date, Apache has drilled three wells in the Liard that are producing gas into an existing pipeline that runs south from the Northwest Territories. A fourth well is under way.
Apache’s work in the Liard Basin came largely from exploration work in the Horn River Basin, says Rob Spitzer, Apache Canada’s vice president of Exploration.
“There was an enormous amount of focus on the Horn River Basin. So at the same time everybody was focusing on the Horn, Apache Canada Geologist Ross Pitman was working neighboring areas around 2007 to see if there was anything else that was a little bit out of the focal area of the industry,” Spitzer recalled.
“In the exploration world it is very important not to follow the herd. Horn River was very active and yet only 60 miles away the Liard Basin was dead. Ideas, strategy and execution allowed for an early and less-expensive entry into the play,” he said.
“We went in and drilled a vertical well in 2009, did a couple of fracs on it, and it worked out really well. After that we drilled a horizontal well, then another vertical well in the deepest part of the (Liard) basin, and all those wells have worked out really nicely.
“I’ve been doing exploration and development now for 32 years in Canada and we’ve had some interesting discoveries, some larger than others,” Spitzer said. “When you think about Liard, you get the opportunity to drill something that’s in the 40 to 60 Tcf range in terms of potential recoverable resource. I think the reason it’s probably one of the more exciting ones is the fact nobody thought you could find something of that size.
“Basically it comes down to the size and the complexity in terms of being able to pick up acreage at relatively low dollars and to test the concept and get a significant part of it. That doesn’t happen very often.”
While Bedingfield acknowledged that depressed North American natural gas prices will limit the immediate pace of development at Liard, he also pointed out that Apache holds a commanding position in the heart of the basin that will bode very well for the future.
“Where we are right now, frankly, we’d love to have higher gas prices, like everyone else in the industry. We need about $2.57 (at the wellhead) to make this thing effectively commercial,” Bedingfield said.
“Liard is a tremendous resource, and I think certainly something of significance and scale that will matter to Apache in the future. We should be in reasonably good shape in the event that we have a clear path for monetization.”
As for drilling plans, the pace of development at Liard will be steady and likely further refined by how quickly the Kitimat LNG project takes shape.
“We’ve now got a number of wells we have to drill over the next three years just to preserve tenure. For this year we’re currently drilling a well and we’ll be spudding another one either later this year or early next winter. Then we’ve got a number of wells that we’re going to have to drill in the following two years.
Given the widespread discussion of LNG, timing is important, Spitzer explained. “So, it’s important for us to drill those tenure wells, but also to drill the wells that are going to be the most beneficial to us to ascertain whether we can turn this into a large economic project.
“The key thing here is that we’ve got really good people and they make all the difference. Exploration is a risky business, so you need people who are good at it who know what kind of work needs to be done to best assure success. Guys like Ross and others who have worked really hard on this thing over the years are instrumental in these types of plays — Liard and beyond.
“You don’t want to spend more money than your knowledge should allow you to, and you don’t want to gain a bunch of knowledge and never do anything. There’s a nice balance in there where you’re always lining up your knowledge levels with your expenditures. That’s hugely important for success."