Natural gas companies are now trying to market themselves as “liquid rich” or “wet gas” producers whenever possible.That’s because these “wet gases,” or NGLs (natural gas liquids), are worth a lot more money than straight-up dry gas – which is methane.
Angle Energy (NGL-TSX) has what I call a “freak of nature” gas field just northeast of Calgary. The field contains a whopping 193 barrels of NGLs for every thousand cubic metres of gas produced. The industry expresses this as “xx bbl/xx Mmcf.”For a gas to be considered “liquids-rich” it must yield greater than 10 bbls NGLs for every MMcf sales gas when processed through a plant. Many producers who speak of “liquids-rich” gas will have average yields of 15-40 bbl/MMcf.
So, how does something like 193 bbls/MMcf happen?
The first reason is that Angle’s Mannville gas pool is located in the “oil window” in Alberta. What this means is that the pool is buried at a depth where the temperature is not too hot and not too cold.(If it was too hot, it would have turned to just gas, and if it was too cold it would never even have turned into hydrocarbons).The other thing that had to happen was MULTIPLE geologic events, which created the full spectrum of petroleum fluids to remain in deposits – and still kept all the hydrocarbons under the same pressure and temperature.
Petroleum fluids (which are oil, gas and condensate) are made up of many different hydrocarbons. There are five general types:
1. black oil
2. volatile oi
3. retrograde gas-condensate
4. wet gas
5. dry gas
A “volatile oil” generally has a higher amount of natural gas in it than a “black oil” does. A volatile oil produces both oil and gas, and the gas helps to lift the oil, making production easier. Imagine a bottle of pop that’s flat, and one that has just been opened. Which one will flow out more easily when shaken? – you get the idea. Think of natural gas & NGL’s as the carbonation and oil as the Coca Cola.
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Angle’s freak of nature Mannville pool is a “retrograde gas-condensate”. The retrograde gas-condensate has much higher total NGLs than a simple “wet gas.” It produces readily (which means it doesn’t need to be stimulated by a process such as fracking), as a volatile oil would, because it has both natural gas and natural gas liquids.
Also, the natural gas liquids will start to separate from the gas and produce both condensate and dry gas at surface.
Now, these retrograde gas deposits occur from Calgary all along the foothills up to the Montney gas play 1000 km north-north-west.
So why don’t I see other companies with similar NGL counts?
That just appears to be luck of the draw. (The 2nd largest NGL count I’ve seen is the 100 barrels of condensate per day in Second Wave’s new Gilwood discovery three hours northwest of Edmonton.)
But technology does play a small role. As production of this exceptionally rich gas continues, and the pressure in the pool becomes lower, the condensate (the most valuable NGL) “drops out” in the reservoir itself.
Recovery of all that condensate is difficult. The problem gets tougher when the reservoir is being produced using only vertical wells. With 14 vertical wells in the Mannville pool, Angle is only seeing an effective 15-20% recovery of all the hydrocarbons in place.
Horizontal wells help solve this issue and produce the natural gas liquids more efficiently along with the gas. Possible recovery factors with a horizontal well development are 60-70% of the hydrocarbons in place. This is obviously a huge difference.
The other technology issue is having the right gas plant. The capabilities of the hundreds of gas plants around western Canada vary widely. Some are able to get out all the various NGLs, and some aren’t. Obviously, the ones that can cost a lot more money and it’s not always worth it, or the operator can’t afford it.
DISCLOSURE: Keith Schaefer owns Angle Energy.