The Montney is a geological formation covering 130,000 square kilometres and spans 700 kilometres north to south, traversing the provincial boundary between northwest Alberta and northeast British Columbia. The formation contains trillions of cubic feet of recoverable natural gas and billions of barrels of recoverable natural gas liquids (NGLs), condensate and oil.
Development of conventional oil and natural gas reservoirs in western Alberta and northeast British Columbia have been ongoing for more than 50 years. This historical activity targeted oil and natural gas trapped at shallower depths in pockets of high-permeability, highly porous rock, which could be readily produced with vertical wells.
Only in the last decade, have some of the deeper, unconventional resources, such as the Montney, become commercially viable. These unconventional reservoirs have less permeable and less porous rock. The key to unlocking these resources has been the advent of pad-based horizontal drilling, and hydraulic multi-stage fracturing, which have significantly increased the productivity of wells, while minimizing surface disturbances.
An ultra-rich condensate development region. It saw the first application of modern well completion techniques during 2018.
The company’s primary liquids-rich development region. Capital investments prior to 2018 were largely focused in this area.
A region of high-deliverability resource, driving similar total quantities of condensate as some regions of Nest 2, but with higher natural gas rates. Meaningful development of this region accelerated in 2019.
A future liquids-rich development region, with resource quality on-par with that of many regional peers.
A future delineation and development region consisting of high deliverability natural gas and natural gas liquids.
A large, long-term delineation and development region characterized by deep, high-pressure wells with significant natural gas deliverability.
The Nest is Seven Generations’ primary development region, and can sustain between 15-20 years of future development drilling. Over time, the size of this inventory has the potential to expand as the company validates the development potential of other geologic formations and high-grades additional land outside of the Nest.
Seven Generations holds nearly a 100% interest in the Nest and in many surrounding areas. This region is served year-round by a vibrant oil and natural gas service sector in the city of Grande Prairie.
Unlike other regions of the Montney that have higher natural gas content, the Nest is characterized by substantial condensate and natural gas liquids. Condensate is key for driving some of the best economics in North America because of its superior pricing. The company’s assets are located within convenient reach of North America’s largest demand centre for condensate – the Canadian oil sands.
Condensate is a low viscosity hydrocarbon, which can dilute heavier oils that are too viscous to transport via pipeline. In Alberta, most production from the oil sands is blended with condensate (typically in the ratio of 1 barrel of bitumen with 0.4 barrels of condensate) to make a suitable blend for pipeline specifications.
Unlike oil and natural gas, which are exported to distant markets often at discounted prices, a significant portion of Canadian condensate demand is satisfied by imports, which helps to establish premium product pricing.
Seven Generations Energy had the foresight to secure long-term marketing arrangements for its natural gas, knowing that its economic resource and growing supplies would require adequate offtake to achieve favourable pricing.
The company accomplished this by securing volumes on two transcontinental natural gas pipelines – Alliance and TransCanada – that intersect near Seven Generations’ lands. Today, the company has diversified access to natural gas markets in Alberta (AECO), Eastern Canada (Dawn), the US Mid-West (Chicago Citygate), the Gulf Coast (Henry Hub), and US West (Malin).
These commitments provide the company with capacity to support future, highly economic production growth over the long-term and diversified access to premium consumer markets in the near term.
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