According to new research from Wood Mackenzie, total production in Canada’s Montney play will likely reach 10 billion cu ft equivalent per day (bcfe/d) in 2019, an increase of 16% from 2018.
The outlook for Montney production stays positive beyond this year, with the play forecasted to reach 20 bcfe/d by 2030.
Much of the forecasted growth is being driven by the rising liquids yield across various sub-plays within the Montney. Liquids production is expected to increase by 26% in 2019, while gas production may increase by 14%.
Despite falling natural gas prices, improving sub-play economics driven by higher liquids yields have strengthened the Montney’s position in the greater North American landscape. Much of the play is economic at C$2.00/mcf AECO natural gas prices.
“Depressed natural gas prices have caused operators to rethink Montney development,” Nathan Nemeth, Senior Analyst at Wood Mackenzie, said.
“Montney specialists have made major headway on improving completion design and are being rewarded with operational performance. Liquids is driving the story,” Mr Nemeth said.
Drilling activity from 2010-2014 was led by operators with liquefied natural gas (LNG) export aspirations. From 2015, activity has been led by operators targeting natural gas liquids, specifically condensate.
Not all areas of the Montney are liquids rich. Wood Mackenzie’s research divides the formation into 15 sub-plays, based on multiple factors including geology, geography, gas-to-oil ratios, productivity, and costs.
The remaining value of the play is estimated to be over C$65 billion, but Mr Nemeth noted that the value is concentrated in the best areas, with the top five sub-plays accounting for 74%.
At this stage, two sub-plays account for about 50% of the Montney’s liquids production: Heritage, in British Columbia, and Kakwa, in Alberta.
“Besides the drive for liquids, the corporate dynamics keep the Montney interesting,” Mr Nemeth said. “Much of the activity is from local players, with a mix of public and private companies.”
“But you also have international players like ConocoPhillips and Murphy, as well as LNG-driven activity from Shell, PETRONAS, Mitsubishi and PetroChina” Mr Nemeth added.
“The growing liquids production from the Montney, combined with the final investment decision for LNG Canada last year, make the Montney an important play to keep an eye on in the future,” Mr Nemeth concluded.