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Big Gun - The Montney's Increasing Dominance in Western Canadian Natural Gas Production

In just a few years, the Montney Formation has become the most prolific natural gas production region in Western Canada. Starting from zero in 2005, the Montney has been the primary growth engine for gas supplies and continues to challenge producers to deal with its vast geographic extent and enormous reserve potential. Spread across swaths of Canada’s two westernmost provinces, the formation’s unique geology has meant that its gas production growth has moved at different speeds depending on location, geology, and pipeline access. In this first part of a three-part series, we take a closer look at this important formation.

It wasn’t so long ago that Western Canada’s natural gas production growth was thought to be largely tapped out. After an initial surge in output from the late 1990s into the mid-2000s, production began to slip, as output from conventional shallow gas wells that had driven the jump in supply flattened and then started falling. The hope for coalbed methane-based production that emerged in the mid-2000s was quickly dashed, leaving gas producers searching for new areas to explore with greater intensity and new technologies.

The declines in gas production spurred higher average prices, which had the same effect in Canada as they did in the U.S., allowing producers to shift toward higher-cost unconventional resources to explore for natural gas. Though it had been known to producers since the 1950s, one of the unconventional gas plays that began to attract greater attention in the 2000s was the Montney Formation, which straddles the provincial border of British Columbia (BC) and Alberta (left map in Figure 1). The Montney was a revelation, given the magnitude of its reserves and the highly favorable economics of its wells.

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