January/February Reservoir 2023

JAN/FEB 2023 • ISSUE 1 • VOL 50

THE MAGAZINE OF CANADIAN ENERGY GEOSCIENTISTS

Reservoir cspg.org

2

RESERVOIR ISSUE 1 • JAN/FEB 2023

In This Issue

JAN/FEB 2023

4

Letter from the Editor

6

From the Desk of the AER

8

Petrophysics in the Green Economy – Part 4: Geothermal: Metamorphic and Igneous Rocks

14 The contribution of high-resolution magnetic surveys (HRAM) to the detection of wrench faults systems, HTD reservoir trends, and induced seismicity events in the Peace River Arch and the Deep Basin area of Western Alberta and Northeast British Columbia (NEBC) 19 2023 CSPG Geological Calendar Wrap-up 20 2023 Upcoming Events information 22 The Blue View: Industry Trends Through Woodmac’s Lens

CONFERENCES

UPCOMING EVENTS

PAGE 2

PAGE 2

GUSSOW 2023 SAVE THE DATE

CORE CONFERENCE 2023 CALL FOR ABSTRACTS

PAGES 21

2023 UPCOMING INFORMATION

FLUVIAL INCISION, ALBERTA Coastal plain to prodelta marine sequences within the Cretaceous Horseshoe Canyon Formation are exposed beneath a thin veneer of Quaternary sediments. This aerial shot showing a spectacular map pattern was taken at Picture Coulee, near Drumheller, and allows for the 3D tracing of the depositional units within the formation. Vehicles in the upper left provide scale.

Photo by: Wes Sutherland

RESERVOIR ISSUE 1 • JAN/FEB 2023

3

FROM THE EDITOR TOM SNEDDON, PROFESSIONAL GEOLOGIST (ALBERTA), PROFESSIONAL GEOSCIENTIST

WELCOME... fellow Geologists and related rockhounds, to the third year of the second decade of the second millennium of the (Historical) Common Era of the Holocene Stage of the Tertiary Period of the Cenozoic Era! May you lead the national and global economies to new heights, picking up the pace initiated in 2022.

Hopefully, your New Year Resolutions include learning more through the CSPG courses, conferences, seminars and publications to further advance the science and technology of exploration and production. And, of course, contribute your innovative ideas and research to the Reservoir.

In this edition read, enjoy, and follow up on our continuing articles and columns: •

E.R Crain’s Petrophysics in the Green Economy

•

From the Desk of the AER, we learn from the regulatory world which take-aways will keep us onside with them and how we can further Geoscience technology

•

Interpret Canadian and international industry economic trends described from Wood McKenzie

We present a follow-up technical article:

Like what you see?

Let the Reservoir Team know, particularly if you would like to contribute articles, photos or videos of what you are up to in the exciting world of Energy Geoscience.

•

Dr. Zeev Berger: The contribution of high-resolution magnetic surveys (HRAM) to the detection of wrench faults systems, HTD reservoir trends, and induced seismicity events in the Peace River Arch and the Deep Basin area of Western Alberta and Northeast British Columbia (NEBC)

This edition also contains non-technical articles: •

Markus Ebner: 2023 CSPG Geological Calendar Wrap Up

Don’t forge to check out the “Upcoming Events” information for division talks, technical webinars, conferences for the next 2 months.

We look forward to seeing your manuscripts for the other 2023 editions! Good geologizing to all our readers. n

Tom Sneddon

PUBLICATIONS INFORMATION The RESERVOIR is published 6 times per year by the Canadian Society of Petroleum Geologists. The purpose of the RESERVOIR is to publicize the Society’s many activities and to promote the geosciences. We look for both technical and non-technical material to publish.

The contents of this publication may not be reproduced either in part or in full without the consent of the publisher.

No official endorsement or sponsorship by the CSPG is implied for any advertisement, insert, or article that

4

RESERVOIR ISSUE 1 • JAN/FEB 2023

appears in the RESERVOIR unless otherwise noted. All submitted materials are reviewed by the editor. We reserve the right to edit all submissions, including letters to the Editor. Submissions must include your name, address, and membership number (if applicable). The material contained in this publication is intended for informational use only.

While reasonable care has been taken, authors and the CSPG make no guarantees that any of the equations, schematics, or devices discussed will perform as expected

or that they will give the desired results. Some information contained herein may be inaccurate or may vary from standard measurements. The CSPG expressly disclaims any and all liability for the acts, omissions, or conduct of any third-party user of information contained in this publication.

Under no circumstances shall the CSPG and its officers, directors, employees, and agents be liable for any injury, loss, damage, or expense arising in any manner whatsoever from the acts, omissions, or conduct of any third-party user.

BOARD OF DIRECTORS 2023

PRESIDENT

PAST PRESIDENT

PRESIDENT ELECT

FINANCE DIRECTOR

Simon Haynes

Kelty Latos

Andrew Vogan

Kathy Diaz

Haynes Geological Consulting president@cspg.org LinkedIn

ConocoPhillips Canada Ltd. pastpresident@cspg.org LinkedIn

ConocoPhillips Canada Ltd. presidentelect@cspg.org LinkedIn

Petra Resources Inc. directorfinance@cspg.org Linkedin

FINANCE DIRECTOR ELECT

DIRECTOR

DIRECTOR

DIRECTOR

Scott Norlin

Nicholas Ayre

Mark Caplan

Ross Kukulski

Wood Mackenzie directorfinanceelect@cspg.org LinkedIn

Rife Resources conferences@cspg.org Linkedin

Prairie Lithium technicaldivisions@cspg.org Linkedin

Chevron Canada publications@cspg.org LinkedIn

DIRECTOR

DIRECTOR

DIRECTOR

DIRECTOR

Marcelina Labaj

Shelley Leggitt

Michelle Thoms

Valentina Vallega

Central European Petroleum Ltd. fieldtrips@cspg.org Linkedin

education@cspg.org LinkedIn

Freehold Royalties Ltd. outreach@cspg.org Linkedin

Schlumberger membershipdirector@cspg.org Linkedin

OFFICE CONTACTS

CSPG OFFICE #150, 540 - 5th Ave SW Calgary, Alberta, Canada T2P 0M2 Tel: 403-264-5610 | www.cspg.org

MEMBERSHIP INQUIRIES Tel: 403-264-5610 Email: membership@cspg.org

CONFERENCE INQUIRIES Shaelyn Brown Tel: 403-513-1238 Email: shaelyn.brown@cspg.org

ADVERTISING INQUIRIES Britney Tang Tel: 403-513-1230 Email: britney.tang@cspg.org

MANAGING DIRECTOR Emma MacPherson Tel: 403-513-1230 Email: emma.macpherson@cspg.org

RESERVOIR ISSUE 1 • JAN/FEB 2023

5

From the Desk of the AER Alex MacNeil, Ph.D., P.Geo. and David Herbers, P.Geo.

Cambrian and Devonian Field Work at the Alberta Geological Survey FIGURE 1 Drone (42 cm across) being launched from the “grassy knoll” area at Cripple Creek. Courtesy of C. Penk, Osprey Integrity.

There is a long history of geological field work being conducted by the Alberta Geological Survey but like many activities, it was reduced with the Covid-19 pandemic. In 2022, however, with new opportunities for the province being driven by emerging resources and efforts to decarbonize the industry, we dusted off our boots, filled our acid bottles and headed back out. Herein we describe two field campaigns from this past summer and outline next steps.

One of the exciting areas for the province is the development of technologies that will hopefully lead to commercial-scale extraction of lithium from brines that are found in Devonian-aged Leduc reefs.

Some of these same intervals are also potential targets for carbon sequestration/utilization and storage (e.g., as currently done by Enhance Energy at the Clive Field). Common to both activities, is the need for detailed subsurface characterization including threedimensional modeling that can be used to predict high-flow zones and storage capacity. Subsurface datasets, however, have inherent

6

RESERVOIR ISSUE 1 • JAN/FEB 2023

limitations that are compounded in the wet zone where data collection is typically reduced. Recent advances in facies models for Devonian reefs (e.g., James and Wood, 2010, MacNeil and Jones 2016), carbonate reservoir modeling, and our understanding of the sequence stratigraphic framework of the Devonian (e.g., Wong et al.

2016), combined with the renewed interest in the Devonian of Alberta, motivated three weeks of field work this summer that was focused on the Fairholme Carbonate Complex in the Cripple Creek region. This is a classic locality for studying the Devonian, with various theses

and numerous industry reports completed over the decades.

At the reconnaissance level, Murray Gilhooly joined us at the beginning for a couple of days, introducing specific aspects of the stratigraphy to the team and recounting many lessons learned from studying the area over forty years. Thanks Murray! As part of our field investigation we used the expertise of Osprey Integrity to fly an unmanned aerial vehicle (aka “drone”) over the entire margin at Cripple Creek (Figure 1), capturing high-resolution (~1.5 cm pixel size) images. In select areas the drone was flown at lower elevation, capturing even higher-resolution images.

The photogrammetry has been processed into an orthorectified three-dimensional digital outcrop model (Figure 2) that is currently being integrated with previous studies, with a focus on the stratigraphy and distribution of key units that typically have different subsurface porosity and permeability properties. The intent is to provide a publicly available dataset that can be used as an analogue for subsurface investigations and geomodeling, whether interested in brine-hosted minerals, carbon sequestration, geothermal, and/or conventional hydrocarbon exploitation.

A follow-up campaign is currently being planned for the summer of 2023 that will focus on platform interior successions and reef margins elsewhere.

Going deeper into the Paleozoic, field work was also conducted on the Lower Cambrian Flathead Formation at Windsor Mountain in the Crowsnest Pass area. This formation is being investigated as an outcrop analogue to the Basal Cambrian Sandstone, an important target for CO2 sequestration. The

FIGURE 3 Large subtidal dunes (>50 cm amplitude) with a sharp erosive base in the Early Cambrian Flathead Formation, Windsor Mountain.

Flathead Formation is of similar age (Albertella trilobite zone or slightly older) and thickness (30-40 m) as the Basal Cambrian Sandstone. The field work, conducted over two weeks, investigated the sedimentary facies and depositional environments, interpreted as a tidedominated shelf characterized by mobile sub-aqueous compound dunes (Figure 3). Investigation of the Basal Cambrian Sandstone continues at the survey and may include additional fieldwork next summer. Stay tuned and please check the AGS website https://ags.aer.ca/ for updates on this work!

REFERENCES James, N.P. and Wood, R. 2010. Reefs. In: Facies Models 4. Eds. N.P. James and R.W. Dalrymple. Geological Association of Canada.

P. 421-448.

MacNeil, A.J. and Jones, B. 2016. Stromatoporoid growth forms and Devonian reef fabrics in the Upper Devonian Alexandra Reef System, Canada – insight on the challenges of applying Devonian reef facies models. Sedimentology, 63, 1425-1457.

FIGURE 2 General view of the digital outcrop model for the Cripple Creek margin. As with any digital model, the user can rotate, pan, zoom in/out, annotate and measure features.

The lefthand side shows the classic Skyline Section.

Wong, P.K., Weissenberger, J.A.W., and Gilhooly, M.G. 2016.

Revised Regional Frasnian Sequence Stratigraphic Framework, Alberta Outcrop and Subsurface. In: New Advances in Devonian Carbonates: Outcrop Analogs, Reservoirs, and Chronostratigraphy.

Eds. T.E. Playton, J.A.W. Weissenberger, and C. Kerans. SEPM Special Publication No. 107, 16-79.

RESERVOIR ISSUE 1 • JAN/FEB 2023

7

Petrophysics in the Green Economy

PART 4

GEOTHERMAL: Metamorphic and Igneous Rocks E.R. CRAIN, P.ENG.

INTRODUCTION Medium temperature geothermal projects are often placed in sedimentary rocks, where log analysis methods and rock properties are reasonably well understood. High temperature geothermal is more common in igneous and metamorphic rocks. These are more difficult for petrophysicists to analyze as the physical properties are more variable than those for sedimentary minerals.

Further, igneous and metamorphic rocks are often described by a rock-type name and not by their mineral content. Since logs respond to minerals and not rock-types, an extra step is required to generate rock-types from the mineral components.

This article describes the rock properties as seen by well logs, and the mineral composition of the common rock-types. The objective is to provide the data needed so that you can use your favourite multimineral model to resolve the mineralogy of a potential geothermal reservoir in non-sedimentary settings.

METAMORPHIC ROCK CLASSIFICATION Metamorphic rocks are conventional sedimentary rocks that have been exposed to high heat and pressure. There are several

8

RESERVOIR ISSUE 1 • JAN/FEB 2023

types of metamorphism: contact, regional, hydrothermal, or fault zone friction, Changes that occur during metamorphism are re-crystallization, neomorphism in which new minerals are created from the original, and metamorphism in which new minerals are created by gaining or losing chemical elements.

Specific sedimentary rocks become specific metamorphic rocks, as shown below: Sandstone  Quartzite Limestone OR Dolomite  Marble Basalt  Schist OR Amphibolite Shale  Slate Granite OR Rhyolite  Schist

TABLE 1: MATRIX PROPERTIES FOR METAMORPHIC MINERALS

Quarzite Lime Marble Dolo Marble Slate Granite Schist

DENSMA g/cc 2.65 2.71 2.90 3.15 2.66

DTCMA usec/ft 55.5 47.3 43.9 60.0 55.0

These names are familiar to most geologists, but not to many engineers and log analysts who grew up in a sedimentary world.

METAMORPHIC ROCK PROPERTIES The petrophysical properties of metamorphic rocks are often similar to their pre-metamorphic sedimentary counterparts as long as different minerals have not formed. Standard 2- and 3-mineral models, or probabilistic multi-mineral models, are used to calculate lithology. The density neutron complex lithology model is used to calculate porosity when data and borehole conditions permit. Sonic neutron crossplot models can be used as an alternate when needed.

All the algorithms needed are coded in most petrophysical software packages. For explanations of the math, see Reference 1. See Table 1 for a list of matrix properties for metamorphic rocks.

IGNEOUS ROCK CLASSIFICATION Most people think of granite or lava flows when igneous rocks are mentioned If only it was that simple. There are many variations in rock properties and rock types to take into account during a petrophysical analysis. The mineral and porosity models needed are the same as noted earlier for metamorphic rocks It is more challenging because geologists describe rock-types, which are variable mixtures of minerals, while logs respond only to minerals and not rock-types. We will show how to fix that later on in this article.

TABLE 2: IGNEOUS ROCK CLASSIFICATION

PLUTONIC Coarse Crystalline

PHINMA frac -0.028 0.000 0.040 -0.030 0.000

PE

Plith

Mlith

Nlith

1.82 6.09 3.13 3.55 1.88

1.174 3.161 1.759 ?

1.174

0.861 0.880 0.819 ?

0.861

0.663 0.621 0.562 ?

0.663

Igneous rocks are classified in several ways – by composition, texture, and method of emplacement. The composition (mineral mixture and internal porosity) determines the log response. The texture determines the name used for the mineral mixture, and the method of emplacement determines the texture and internal porosity structure (if any). The same mineral mixture can have more than one name based on its crystal size and method of emplacement.

Intrusive igneous rocks are formed inside the earth. This type cools very slowly and is produced by magma from the interior of the earth. They have large grains, may contain gas pockets, and usually have a high fraction of silicate minerals. Intrusions are called sills when lying roughly horizontal and dikes when near vertical.

Extrusive igneous rocks form on the surface of the earth from lava flows. These cool quickly. They have small grains and contain little to no gas.

Both intrusive and extrusive rocks may contain natural fractures from contraction while cooling, and may have carried non-igneous rocks with them, called xenoliths.

Intrusive rocks may alter the rocks above and below them by metamorphosing (baking) the rock near the intrusion. Extrusives only heat the rock below them, and may not cause much iteration due to rapid cooling. Extrusives can be buried by later sedimentation, and are difficult to distinguish from intrusives, except by their chemical composition and grain size.

The mineral composition of an igneous rock depends on where and how the rock was formed. Magmas around the world have different mineral make up.

VOLCANIC Fine Crystalline

PYROCLASTIC Glassy

Granite

Rhyolite

Rhyolite Tuff

Granodioite

Dacite

Dacite Tuff

Quartzdiorite

Andesite

Andesite Tuff

Diorite

Basalt

Zeolite Tuff

Gabbro

Dolerite

Quartzite

SILICA CONTENT

GAMMA RAY DENSITY

Highest

Lowest

Lowest

Highest

Disabase Dunite

RESERVOIR ISSUE 1 • JAN/FEB 2023

9

FIGURE 1: DENSMA VS DTCMA CROSSPLOT Felsic igneous rocks are light in color and are mostly made up of feldspars and silicates. Common minerals found in felsic rock include quartz, plagioclase, feldspar, potassium feldspar (orthoclase), and muscovite. They may contain up to 15% mafic mineral crystals and have a low density.

Mafic igneous rocks are dark colored and consist mainly of magnesium and iron. Common minerals found in mafic rocks include olivine, pyroxene, amphibole, and biotite. They contain about 46-85% mafic mineral crystals and have a high density.

Ultramafic igneous rocks are very dark colored and contain higher amounts of the same common minerals as mafic rocks, about 86-100% mafic mineral crystals.

Intermediate igneous rocks are between light and dark colored. They share minerals with both felsic and mafic rocks. They contain 15 to 45% mafic minerals.

Plutonic and volcanic rocks generally have very low porosity and permeability. Natural fractures may enhance porosity by allowing solution of feldspar grains.

FIGURE 2: MLITH VS NLITH CROSSPLOT

Tuffs and tuffaceous rocks have high total porosity because of vugs or vesicles in a glassy matrix. This is most common in pyroclastic deposits. Interparticle porosity may also exist. Some effort has to be made to separate ineffective microporosity from the total porosity. Pumice (a form of tuff) has enough ineffective porosity to allow the rock to float on water!

When other minerals fill the vesicles by precipitation, the tuff is called a zeolite.

For quick-look identification of igneous rocks, crossplots have been widely used for many years.

Before the advent of the PE curve, crossplots using neutron, sonic and density were the best bet.

Some prior calculations are required. Matrix density (DENSma), sonic matrix travel time (DTCma), lithology factors Mlith and Nlith must be derived. With the PE curve, a lithology factor called Plith can be added, as well as Uma, the matrix capture cross section.

Examples are shown in Figures 1 and 2.

IGNEOUS MINERAL PROPERTIES Most igneous rocks are described by their rock-type and not by their mineral composition. For example, granite is a rock-type composed of the minerals quartz, feldspar, and plagioclase. Logs respond to the mineral mixture, not the rock-type. Once the mineral fractions are derived by a suitable log analysis model, a second step is needed to convert the minerals to rock-types.

Properties for individual minerals are better known and less variable than rock-type values. It is more accurate to use a mineral model than a rock-type

10 R E S E R V O I R I S S U E 1 • J A N / F E B 2 0 2 3

TABLE 3 Magnetite Hornblend Quartz K Feldspar Plagioclase Biotite Pyrite

DENSMA g/cc 5.08 3.20 2.64 2.52 2.62 3.00 4.99

DTCMA usec/ft 73.0 43.8 56.0 46.0 53.0 55.0 39.2

PHINMA frac 0.0 0.0 -0.02 -0.03 0.0 0.21 0.06

FIGURE 3: TYPICAL MINERAL COMPOSITION OF IGNEOUS ROCKS – USE AS A GUIDE TO CONVERT MINERALS TO ROCK-TYPES.

PE

Plith

Mlith

Nlith

22.0 6.0 1.8 2.9 3.0 6.3 17.0

5.3922 2.7273 1.0976 1.9079 1.8519 3.1500 4.2607

0.2794 0.6509 0.7988 0.9276 0.8272 0.6800 0.3704

0.2451 0.4545 0.6098 0.6579 0.6173 0.4990 0.2505

model. Here are the mineral properties that can be used in the various multi-mineral log analysis models. These are the same values that might be used in a sedimentary rock sequence, sorted to reflect the common constituents of igneous rocks. See Table 3.

Sometimes a mineral is determined by triggers based on their specific log responses. For example, where basalt beds are interspersed between conventional granite or quartzite, it is easy to use the PE or density logs to trigger 100% basalt, leaving the remaining minerals to be defined by a two or three mineral model.

CONVERTING MINERALS TO ROCK-TYPES After determining the mineral composition, the rock-type can be estimated from a near-fit to the mineral composition shown in Table 4.

Table 4 is based on Figure 3, courtesy of Schlumberger.

Since a typical log suite can solve for 3 or 4 minerals at best, you need to choose the dominant minerals and zone your work carefully. If you have additional useful log curves, you might try for more minerals or set up several 4 mineral models in a probabilistic solution. A good core or sample description will help you choose a reasonable mineral suite.

TABLE 4: CONVERTING MINERALS TO ROCK-TYPES

Plagioclase Quartz K Feldspar Orthopyroxene Other

Granite 0.30 0.27 0.35 0.00 0.08

GranoDiorite 0.46 0.21 0.15 0.00 0.18

QuartzDiorite 0.53 0.22 0.05 0.00 0.20

Diorite 0.63 0.02 0.03 0.00 0.32

Gabbro 0.53 0.00 0.16 0.15 0.16

RESERVOIR ISSUE 1 • JAN/FEB 2023

11

FIGURE 4: Metamorphic / Granite example with spectral GR (Track 1), total gas (Track 2), resistivity (Track 3), fracture aperture, fracture intensity, fracture porosity (from FMI processing, Track 4), density, neutron, PE (Track 5), log analysis porosity (Track 6), water saturation (Track 7), core permeability (Track 8), quantitative sample description (Track 9), calculated lithology (Track 10).

EXAMPLE #1 – METAMORPHIC SAND / GRANITE This is a granite/metamorphic example from Indonesia. It is a gas well but is displayed here to illustrate the match between log analysis mineralogy and sample descriptions.

The reservoir has porous granite at the base, metamorphic sandstone above, topped by conventional sandstone. Porosity is moderately low throughout but the gas column is continuous.

Interbedded shales (schist or gneiss in the metamorphic interval) are present but do not act as barriers to vertical flow.

In this case, the mineralogy was calibrated by quantitative sample descriptions, which in turn were keyed to raw log response to minimize cavings and depth control issues.

Porosity was derived from conventional log analysis methods.

The reservoir is naturally fractured and a fracture intensity curve was generated from anomalies on the open hole logs. This was compared to the fracture intensity from resistivity micro image log data.

In Figure 4, compare fracture intensity from log anomalies (black shaded curve in porosity track with fracture intensity from FMI (red curve, track 4). Best gas production in granite is confirmed by gas show on gas log and by production logging in open hole.

Sample descriptions show minerals as seen in microscope (quartz, feldspar, mica) to nearest 5%. Log analysis lithology show rock type, not minerals (quartz, granite, granodiorite). The sands and shale

FIGURE 5A: TERNARY DIAGRAM FOR GRANITE

12 R E S E R V O I R I S S U E 1 • J A N / F E B 2 0 2 3

FIGURE 5B: MLITH VS PLITH CROSSPLOT FOR GRANITE (MICACEOUS DATA EXCLUDED)

immediately above the granite are metamorphosed, visible in samples, but there is little effect on log properties except for low clay bound water on neutron and density logs in the shale/slate. Some wells had limestone marble in the metamorphosed interval.

EXAMPLE #2 – FRACTURED GRANITE WITH POROSITY

FIGURE 6: In this fractured granite example, raw data curves are shown in Tracks 1, 2, and 3 with effective porosity, water saturation, and matrix permeability in Tracks 4, 5, and 6. The mineral model calculated from the log analysis is in Track 7 and the rock type model calculated from the minerals using the ternary diagram is in Track 8. Basalt was triggered from high density or high PE or both.

This example is from the Bach Ho (White Tiger) Field in Viet Nam. It is not a geothermal prospect but the logs and analysis methods demonstrate precisely what should be done for any geothermal well which is not too hot for the available logging tools.

Log analysis in these reservoirs requires good geological input as to mineralogy and porosity. A good coring and sample description program is essential, and production tests are helpful. The analyst often has to separate ineffective (disconnected vugs) from effective porosity and account for fracture porosity and permeability. All the usual mineral identification crossplots are useful but the mineral mix may be very different than normal reservoirs.

In the example below, the granitic mineral assemblage was defined by the ternary diagram at right. The three minerals (quartz, feldspar, and plagioclase) were computed from a modified Mlith vs Nlith model, in which PE was substituted for PHIN in the Nlith equation. If data fell too far outside the triangle, mica was exchanged for the quartz.

FIGURE 7: RESISTIVITY MICRO SCANNER IMAGE IN GRANITE RESERVOIR

Three rock types, granite, diorite, and monzonite, were derived from the three minerals. A trigger was set to detect basalt intrusions. A sample crossplot below shows how the lithology model effectively separates the minerals.

A sample of the log analysis plot is shown in Figure 6. The average porosity from core and logs is only 0.018 (1.8%) and matrix permeability is only 0.05 md. However, solution porosity related to fractures can reach 17% and permeability can easily reach higher than several Darcies. Customized formulae were devised to estimate these properties from logs, based on core and test data. My colleague Bill Clow devised most of the methods used on this project.

Fracture porosity from resistivity micro scanner logs was also computed where available to help control the open hole work. A black and white resistivity image log below shows some of the fractures. Both high and low angle fractures co-exist.

It is clear that non-conventional reservoirs may need some extra effort and customized presentations. The mineral properties need to be chosen carefully, but the mathematical models won’t change.

REFERENCE Crain’s Petrophysical Handbook online 2022

RESERVOIR ISSUE 1 • JAN/FEB 2023

13

The contribution of high-resolution magnetic surveys (HRAM) to the detection of wrench faults systems, HTD reservoir trends, and induced seismicity events in the Peace River Arch and the Deep Basin area of Western Alberta and Northeast British Columbia (NEBC) By: Dr. Zeev Berger and the technical team of Image Interpretation Technologies Inc. information zeev@iitech.ca

In the last June-August issue of the CSPG reservoir we presented an article that illustrated how the integration of HRAM data with other conventional exploration tools may be used to identify tectonically active areas that are likely to cause induced seismicity events related to the development of unconventional reservoirs by horizontal drilling practices (Berger et al, 2022). The results of that study indicated that many of these tectonically unstable areas occur along reactivated wrench fault systems and related hydrothermal dolomite (HTD) reservoir trends. The intent of this article is to examine this phenomenon and explore avenues that may help the oil industry to explore and develop unconventional resources plays safely, in areas of the Peace River Arch, the Deep Basin, and other parts of the Western Canadian Sedimentary Basin.

The article is divided into four parts. The first section illustrates the basic principle of using HRAM images to map and analyze major wrench fault systems. The second section illustrates the tie between wrench fault systems that were identified in the Peace River Arch and the Deep basin and the known occurrence of HTD reservoir trends. The third part illustrates how HRAM data may be used to map and identify different fault systems in areas of known HTD reservoirs trends in the Peace River area. The last section is focused on illustrating the benefit of using HRAM data in areas that are already covered by 3D seismic surveys.

PART 1 - Review of basic principles and

interpretation techniques of wrench fault systems with HRAM data.

The basic concepts and principles that must be considered during the analysis of wrench fault systems with HRAM data are shown in Figure 3. Figure 3A shows the assemblage of different structural features that may be found along regional-scale wrench fault systems (Harding et al, 1999). These structures produce

14 R E S E R V O I R I S S U E 1 • J A N / F E B 2 0 2 3

diverse types of both compressional and extensional features that can abruptly change along the main strike of the fault zone. The frequent changes in the geometry of the faults, along strike, make them difficult to map with 2D seismic alone, particularly in areas where the faults do not show significant vertical displacement.

High resolution magnetic surveys provide a more regional view of major wrench fault systems and thus they can be used for early recognition of the diverse geometries of wrench fault systems. For example, the magnetic image in figure 3B shows the geometry of the Gambill Shear Zone in the Northern Mackenzie Valley in the NWT (Berger et al, 2012). The HRAM data identifies the complex interaction between the shear zone and the Canadian Fold and Thrust Belt. A double plunging anticline that was originally recognized on the HRAM imagery was later drilled by Northrock resources in 2005 and became the first oil discovery in this area since the discovery of Norman Wells in the late 20’s. Another example of the ability of HRAM images to detect complex structures along major fault zones is shown in Figure 1C. In this case HRAM data was merged with RADARSAT imagery to assess the geometry of a major wrench fault system in the heavy vegetative jungle of Nicaragua.

FIGURE

The last example of Figure 1D illustrates how regional magnetic survey can be calibrated with regional seismic line to produce a 3D block diagram that illustrate the spatial geometry of the fault along strike.

In summary, HRAM images can be used for detailed mapping of regional scale wrench fault systems.

1

Examples of different data sets that illustrate the basic principles used to investigate wrench faults. Figure 3A shows the diverse types of structures and hydrocarbon traps that may developed along a wrench fault system (Harding et at, 1999). Figure 3B shows structural interpretation of HRAM data along the Gambill fault in the Northern Mackenzie valley of the NWT. Figure 3C shows magnetic and surface interpretation of a major wrench fault in the thick jungle of Nicaragua. Figure 3D illustrates the integration of a 2D seismic line with HRAM data.

PART 2 - Identification of major wrench

fault system and related zones of tectonic instability in the Peace River Arch and the Deep Basin area.

The locations of major areas of tectonic instability of the study areas are shown in Figure 1. is an insert of a portion of the Neo-Tectonic map that was constructed in this area through the integration of seismic and non-seismic data (Berger et al, 2022). The map also shows seismicity events that were recorded in Alberta from 2006-2018. Figure 1B shows the occurrence of HTD reservoir trends of the same area (Davies and Smith, 2002). The combination of the two data sets allows the recognition of four different areas of tectonic instability as follows: •

The Fox Creek Fault Zone.

•

The Ferrier Fault Zone.

•

The Teepee Fault Zone.

•

The Parkland Faults Zone.

The outlines in Figure 1A and 1B show four areas of high density of natural and seismically induced earthquake events. The Blue outline indicates that the seismicity events are related to reactivation of the wrench fault system in response to late Laramide thrusting of the Canadian Rockies. The Red outline indicates that the seismicity events are related to isostatic rebounding of the Peace River Arch. Note the strong degree of correlation between the wrench fault systems that were identified in Figure 1A and the location of HTD reservoir trends (red stars) shown on Figure 1B. In summary, the integration of Neo-tectonic maps with HTD reservoir maps can lead to early identification of areas that are likely to be susceptible to induced seismicity events related to horizontal drilling practices.

PART 3 - Analysis of the Teepee Fault Zone in the Puskawaska area.

The integration of HTD reservoir maps with interpretation of HRAM data maybe be demonstrated with data from an integrated study of the Puskawaska

RESERVOIR ISSUE 1 • JAN/FEB 2023

15

FIGURE

2

Maps of parts of the Peace River Arch and the Deep Basin areas. 1A is a Neo-Tectonic map (Berger et al,). 2B shows parts of an HTD map of the area (Davies and Smith, 2006). The red and blue outlines highlight four major areas of frequent occurrence of seismicity events.

area conducted in this area by IITECH in 2010. The main goal of that study was to identify the structural setting of several Banff gas fields as well as a Beaverhill Lake oil field (Granite Wash type) that were discovered in this area about that time (Canadian discovery 2007).

PART 4 - Integration of 3D seismic and magnetic data for the analysis of wrench fault system and related HTD reservoirs trends.

The study area was centered around the intersection of the Teepee fault with the Leduc fringing reef that developed along the southwestern margins of the Peace River Arch (figure 2A). Notably, several HTD related Wabamun gas fields developed along different wrench fault systems in this area. (Stokes, 1987, Packard et al 2001). Also plotted on this map are the locations of natural (yellow outliner) and seismically induce (red outlier) earthquakes that occurred along the Teepee fault in recent times.

The last part of this article aims to illustrate the benefit of using HRAM data in areas that are already covered by 3D seismic surveys. This aspect is demonstrated with two case studies: 1) The Wabuman Parkland gas field that was discovered by Imperial Oil in 1965 and 2) The Slave Point Ladyfern gas field that was discovered

by Apache Canada and Murphy Oil in 2001.

Figure 2B shows a residual map of an HRAM data that is centered around the intersection of the Teepee Fault Zone with the Leduc fringing reef. Basement contour lines that are derived from well information are superimposed on the magnetic image.

The magnetic image shows the presence of several reactivated faults that appear on the magnetic image as high frequency linear features. The area of the “Granite-Wash” type deposits of the Beaverhill Lake Oil Sand play is shown as a profound magnetic low feature that reflect the accommodation space that was needed for the deposit of the reservoir of the Beaverhill oil field. Detailed structural interpretation of the fault systems and related oil and gas accumulations are shown in Figure 2C. In summary, the interpretation of HRAM data provided critical information regarding the presence and location of active fault systems in this area.

16 R E S E R V O I R I S S U E 1 • J A N / F E B 2 0 2 3

The structural setting of the Parkland Wabuman gas field was constructed trough the integration of a small 3D seismic, well data, HRAM and super HRAM images (Figure 4A, Packard, et al). The map illustrates that the reservoir in the field was developed along several northwest trending fault systems, but the actual trap was formed at the intersection of two major graben faults that formed a well-defined “trap door” structure (Berger et al, 2012). The discovery wells were drilled into collapsed synclinal features that developed along the dolomized wrench faults. Two of the key wells in this field produced over 225 BCF of gas indicating the ability of this type of reservoir to drain very large areas. Also, a major seismically induced earthquake of 5.5 magnitude was recorded north of Parkland. The induced seismicity event was attributed to the drilling of a horizontal well in the Montney formation near the same wrench fault that formed the collapse syncline that was drilled in the Parkland area in 1965.

The structural setting of the Lady fern of the Slave Point gas field was also established through the integration of HRAM data and attribute maps derived from 3D seismic data. (Figure 4B, Boreen and Colquhoun, 2001). The field was formed along several wrench fault systems that were identified on HRAM data. These faults

FIGURE

3

An example of the integration of HTD reservoir maps and HRAM data in areas of known reactivated wrench fault systems. Figure 2A is a small segment of the southwestern margin of the Peace River Arch of the HTD map of the WCSB (Davies and Smith, 2006). Figure 2B is a residual HRAM image of the area that is shown in the black box of figure 2A. The yellow arrows show the location of reactivated segments of the Teepee Fault Zone. The red arrow shows the location of a reactivated basement fault. Also shown is a large basement low features that marks the location of the Beaverhill oil field. Figure 2C show a structural interpretation of the HRAM data of the same area as shown in Figure 2B.

generated an extensive network of HTD trends that were recognized and mapped on 3D seismic data. As in the case of the Parkland gas filed, the discovery well was drilled into a large collapse syncline that was formed along a “horst tail” feature of the wrench fault. Several different operators that drilled wells into the areas of HTD reservoir trends have found that the entire field is well connected by the same pressure regime. The field was depleted pre-maturely because the different operators in the field failed to reach an adequate production sharing agreement (Etam 2016).

The Ladyfern field did not triggered any induced seismicity events because it was drilled by conventional vertical wells. However, it is quite certain that any attempt to develop this field by horizontal drilling practices would have resulted in major losses of fluid circulation and possibly significant induced seismicity events.

In summary, the availability of HRAM data provided significant information about the relationships between basement structures and related HTD reservoir trends of both fields.

Closing Remarks Wrench fault systems are regional scale features that exhibit different geometry along their strike. These faults are difficult to map with seismic data alone particularly in segments of the fault that lack significant vertical relief. Yet, these faults can form a complex pattern of HTD reservoir trends that are known to become tectonically active in response to horizontal drilling, fracking, and fluid injection practices. This article illustrated, with several examples, the benefit of using HRAM to assist in the evaluation of wrench fault systems, HTD reservoir trends and related induced seismicity events. In the coming months, we plan to extend the study into other areas that are known for the presence of induced

seismicity events related to the presence of wrench fault systems and related HTD reservoir trends. These areas include: 1) The Horn River Basin in NEBC, (BC Oil and Gas Commission, 2012), and 2) Southern Alberta Bakken Play, (Schultz et al., 2015).

Also, we would welcome any comments and suggestions regarding this challenging subject.

Acknowledgements Finally, we would like to acknowledge the contribution of individual members of the IITECH technical team who made specific contributions to this mapping project. Michelle Boast and Martin Mushayandebvu participated in building the early versions of the tectonic map of the Deep-Basin area. Freedy Nzue Nzue have made significant contributions to the mapping of the Montney Formation in the Peace River Arch area. Jim Ellis from Ellis Geospatial processed all the remote-sensing data that was used for this project and generated the GIS files that made this integrated process possible.

Thanks, are also due to Graham Davies for reviewing this article and allowing us to use his HTD maps.

REFERENCES CITED IN THIS ARTICLE BC Oil and Gas Commission- August 2012, Investigation of observed seismicity in the Horn River Basin.

Berger Z., Mushayandebvu. M, Boast, M 2010, The contribution of HRAM data to exploration in Canada, An overview, Canadian Society of Exploration Geophysics, January, v.35, no 10.

Berger Z., 2022, Detection and analysis of tectonically active fault zones and introduction of a new Neo-tectonic (NET) map of the Peace River Arch in Alberta and NEBC. Canadian Society of Petroleum Geologists, Reservoir, Jul/Aug. Issue 4. Vol 49. P 22-27.

RESERVOIR ISSUE 1 • JAN/FEB 2023

17

FIGURE

4

Examples of two case histories that illustrates the contribution of HRAM data in areas that are covered by 3D seismic surveys. The first example shows the structural setting of the Parkland Wabamun gas field (4A, Packard et al, 2001). The second example shows the structural setting of Ladyfern Slave Point gas field (4B, Boreen and Colquhoun 2001). The location of a major induced seismicity event that occurred north of the Parkland field is shown in red star in Figure 4A. The location of wells that were drilled by different operators in Ladyfern are shown by colored circles in Figure 4B.

Berger, Z., and G.R Davies, 1999, The development of linear hydrothermal dolomite (HTD) reservoir facies along wrench or strike slip fault systems in the Western Canadian Sedimentary Basin: Canadian Society of Petroleum Geologists Reservoir, January, v.26, p.34-38.

Etam., T, 2016 The Ladyfern legend: huge reserves, frenzied drilling, and no one made money. Sound familiar? BOE report January 19, 2016.

Boreen, T., and Colquhoun, 2001, Ladyfern, NEBC. Major gas discovery in the Devonian Slave Point formation: Canadian Society of Petroleum Geologists, Annual Convention, abstracts, P. 112//1-5.

Canadian Discovery. 2207, Puskawaska Beaverhill Lake Sand Oil. Canadian Society of Petroleum Geologists Reservoir, issue 2, Davies, G. R. and Smith, L. B., 2006. Structurally controlled hydrothermal dolomite reservoir facies, an overview. In: Structurally controlled hydrothermal alteration of carbonate reservoirs. Bulletin of the American Association of Petroleum Geologists, v. 90, no. 11, p.

1641-1690.

18 R E S E R V O I R I S S U E 1 • J A N / F E B 2 0 2 3

Harding, T.P., 1999, Petroleum traps associated with wrench faults, AAPG Bulletin. P 34.

Packard, J. J., Al-Aasm, I., Samson, I., Berger, Z., and Davies, J. 2001.

A Devonian hydrothermal chert reservoir: the 225 bcf Parkland field, British Columbia, Canada. Bulletin of the American Association of Petroleum Geologists, v. 85, no. 1, p. 51-84., Stoakes, F.A.1987, Fault controlled dolomitization in the Wabamun Group, Tangent field, Peace River Arch: Canadian Society of Petroleum Geologists Second International Symposium on Devonian systems core conference and display Guidebook, P. 73-85.

Schultz, R., Mei. S., Pana, D. Stern, Vol. 2015. The Cardstone Earthquake Swarm and hydraulic Fracking of the Exshaw formation (Alberta Bakken Play). Bulletin of the Sedimentology Society of America 105(6): 2871-2884.

2023 CSPG Geological Calendar Wrap-up

By Markus Ebner

Welcome to the 2023 CSPG Geological Calendar!

The 2023 Geological Calendar is sure to please. This year’s calendar highlights new perspectives on old vantages. Best Photo, from Wes Sutherland, gives us a drone perspective on the classic horizontal strata from the Badlands of Alberta with a number of automobiles for scale. Farther afield, we see images above the Grand Canyon in Gord Hurlbert’s shot with white-water rafts for scale and, of the massive scale of the sandstone cliffs in Andrew Miall’s image from the Wadi Rum (again with vehicles for scale). Scaling it down, Dave Pattison won Best Sub Category Photo of metamorphic texture, with a thin section microphotograph of a crenulated muscovite schist under cross polarised light.

The CSPG Calendar would not be possible without the time and effort the members of the society put into submitting their photos. The attention to detail and effort that Clint Tippett puts into the judging committee as well as a significant amount of time into fact checking, research and editing the captions, is critical to producing such a high-quality calendar year over year. Also to the staff of the CSPG, specifically, Britney Tang and Emma MacPherson for helping to graphically and organizationally put together the final product for the members of the society.

Welcoming 2023, lets hope for continued economic and societal fortune, and exciting times. Enjoy your calendar and have an amazing year ahead.

RESERVOIR ISSUE 1 • JAN/FEB 2023

19

2023 UPCOMING EVENTS INFORMATION

VISIT UPCOMING EVENTS

JANUARY January 10th, 2023

January 12th, 2023

Tuesday | 12:00 pm - 1:00 pm MST

Thursday | 12:00 pm - 1:00 pm MST

BASS Technical Division

Geothermal Technical Division

Depositional environments, stratigraphic packages, and petrographic analysis of the Basal Cambrian Sandstone at the Industrial Heartland, Alberta

Mapping Techno-Economic Feasibility of Geothermal Resources in Alberta

Speaker: D avid Herbers1, Tyler Hauck1, John Gordon2, 1) Alberta Geological Survey, 2) Spectrum Geosciences Location: CSPG Conference Room, +15 level, 540-5 Ave SW, Calgary AB

January 11th, 2023 Wednesday | 12:00 pm - 1:00 pm MST

International Technical Division Ground Truth in the Wild West: Field Geology in Papua New Guinea Speaker: Robert Thomson, Maha Energy Location: C SPG Conference Room, +15 level, 540-5 ave SW, Calgary AB

20 R E S E R V O I R I S S U E 1 • J A N / F E B 2 0 2 3

Speaker: Gordon Brasnett, University of Calgary Location: CSPG Conference Room, +15 level, 540-5 Ave SW, Calgary AB

January 18th, 2023 Wednesday | 12:00 pm - 1:00 pm MST

Structural Technical Division Characterization of Natural Fractures in Oil Sands Reservoirs and Caprocks, Athabasca and Cold Lake Regions, Alberta Speaker: Kevin Gillen, Vox Terrae Location: CSPG Conference Room, +15 level, 540-5 Ave SW, Calgary AB

2023 UPCOMING EVENTS INFORMATION January 19th, 2023

February 8th, 2023

Thursday | 12:00 pm - 1:00 pm MST

Wednesday | 12:00 pm - 1:00 pm MST

Virtual

GeoWomen

International Technical Division

The Journey from Geoscientist to Entrepreneur

Revival of the Nova Scotian Petroleum Province: Applying Global Analogues and Enhanced Seismic Imaging

Speaker: A ndrea Crook, CEO OptiSeis Solutions Ltd.

Speaker: Karyna Rodriguez, Searcher

Location: C SPG Conference Room, +15 level, 540-5 Ave SW, Calgary AB

January 20th, 2023

February 17th, 2023

Friday | 7:30 pm MST

Friday | 7:30 pm MST

Palaeontology Technical Division Irvine Palaeontological Survey and the Palaeontological History of the Region Speaker: S teve Kary, Irvine Regional Palaeontological Survey

February 2nd, 2023 Tuesday | 12:00 pm - 1:00 pm MST

Palaeontology Technical Division Palaeocene Mammals and their Fossil Sites in the Calgary Area Speaker: Craig Scott and Lisa Bohach Location: Pending

Location: Pending

FEBRUARY

Location: This talk will be online only

February 23rd, 2023 Thursday | 12:00 pm - 1:00 pm MST

Virtual

GeoWomen

Virtual

Structural Technical Division Harnessing the Power of Carbonate Fault Rocks

Always Negotiate! How to Get the Best Deal Out of Any Job Offer Speaker: Barry Forward, PCC, Executive Coach, Professional Career Mobility Specialist Location: This talk will be online only

Speaker: Christie Rowe, McGill University Location: This talk will be online only

RESERVOIR ISSUE 1 • JAN/FEB 2023

21

The Blue View: Industry Trends Through Woodmac’s Lens NORTH AMERICA IN CONTEXT: OVERARCHING THEMES ACROSS THE INDUSTRY OF THE 1. CANADIANISATION OIL SANDS CONTINUES WITH TOTALENERGIES AND TECK

REMAIN TIGHT IN 2023; THE L48 ARE 2. WILL 3. INLOOMING ESPECIALLY IN THE L48 OIL FIELD SERVICES MARKET

LOWER 48 n Record-breaking earthquake in the Permian

On November 16th, an M5.4 earthquake was registered, the largest ever recorded in the Permian. While its epicenter was in Northern Reeves County, tremors were felt as far as San Antonio and El Paso. This follows numerous other seismic events in the region where seismicity has been broadly linked to saltwater disposal wells (SWDs), injecting produced water into permeable formations. Following current Railroad Commission of Texas (RRC) regulations established in March 2022, deep SWDs within a 4.5km radius of the event must be shut in and shallow SWDs must cut injection by 50%.

The magnitude of this event was unprecedented and caught the attention of many in the region, but is unlikely to result in meaningful short-term regulation changes. First, there are few SWD wells in the affected area. Based on current regulations, the impact on local injection capacity will be limited since there are no active deep SWDs and few shallow SWD wells will need to be curtailed. Second, RRC regulations in this specific area are historically less severe than more populated areas in the basin.

Midland has experienced fewer and smaller earthquakes than the Delaware Basin. But deep SWDs around the city of Midland have been shut in since late 2021. Earthquake magnitude matters, but location is more important. A M5.4 in the Midland area would result in stronger regulatory action. Third, E&Ps now have more options. Produced water management landscape has changed dramatically in recent years. Expanded water pipeline networks mean companies don’t need to rely solely on SWDs near producing wells. Instead, operators can send produced water for disposal to further locations. n Windfall tax proposals

US Independents are wrestling with the conundrum of falling oil prices, rising costs, and largely under-hedged production compared to previous quarters. Add the issue of windfall profit proposals into that complexity, and planning 2023 and beyond becomes very intricate. Indeed, last quarter’s earnings are down from bumper Q2 numbers, but US E&Ps are still moving towards taxable scenarios when loss carryforward provisions run out.

22 R E S E R V O I R I S S U E 1 • J A N / F E B 2 0 2 3

REGULATORY SHIFTS

The US hasn’t implemented material fiscal changes like other countries such as the UK, but numerous government proposals indicate a willingness to seek additional tax revenue from the sector. This is obviously complicated. What if profits grow for reasons outside of a price spike? Accretive M&A has been an ongoing theme in US tight oil. Ditto for the impact of restrained spending on profits. Timing is also an issue that complicates windfall taxes. The late November drop in WTI erased the majority of 2022 gains. n OFS claw back

Will Lower 48 OFS adjust its strategy and invest in capacity additions next year? The short answer is no. OFS margin expansion is the biggest cost inflation driver E&Ps must contend with.

Just like their E&P peers, OFS companies are protecting capital returns and not investing cash flow in new capacity. Rather, equipment is being retrofitted to remain competitive. This discipline will keep the equipment market tight in 2023, allowing OFS providers to regain even more pricing power.

Lead times will stay stubbornly elevated for specialty equipment.

Frac spread and “super-spec” rig markets will also remain at very high utilization levels. Attracting incremental labor will be a significant headwind that impacts every part of the supply chain.

Every industry is competing with OFS. And on tangibles, tubular prices are at all-time highs. However, we do expect rates to stabilize. Inflation has stemmed from a lack of pipe manufacturing capacity in the US rather than high steel prices. With US mid-west hot rolled coil steel prices back at 2019 levels, domestic pipe mills are incentivized to close the gap between finished pipe and steel prices.

CANADA: n Newfoundland & Labrador lease sale attracts

Cdn$238 million bids

On 2 November 2022, the Canada-Newfoundland & Labrador Offshore Petroleum Board (C-NLOPB) announced the 2022 Call for Bids results. Five bids were submitted from four participating companies. The province uses a work commitment bid system, which is different to signature bonuses. 25% of the work

commitment is paid upfront as a security deposit. This can be recovered as drilling, geological or survey work is conducted during the initial six-year licence period.

Work commitments totalled Cdn$238 million (US$174 million) for the five parcels, with Cdn$182 million (US$133 million) of that coming from just one block, Parcel 8. A total of 28 parcels were submitted in the call for bids. The 23 unbid parcels can be revisited in future lease sales. One of those blocks was a standout, accounting for 76% of the total work commitments received in the round. BP, Equinor, ExxonMobil and QatarEnergy participated.

Canadian-headquartered companies were absent this year. Suncor and Cenovus will account for 34% of 2023 production in the province, but both corporations are focusing on oil sands and downstream businesses.

Overall, we view the results as mixed. While the province will be encouraged by the top explorer names involved and returning, this sale had even bigger potential. Many of the blocks on offer were previously leased in 2015 and 2016; those years brought in Cdn$1.9 billion of work commitments following the excitement of the Bay du Nord discovery. No bids were made in 2022 for the South Eastern Newfoundland Region Call for Bids or for parcels to the north in the Orphan Basin.

Companies showed restraint in work commitment bids. More acreage was leased in 2022 versus 2018, but the bid amount was nearly six times less. The annual bid per acre average has fluctuated between Cdn$3/acre to Cdn$580/acre since 2014. The 2022 high parcel bid of Cdn$275/acre and the sale-wide average of Cdn$79/acre are low compared to the 20142018 period.

TTE holds a 50% non-op working interest in the Surmont in situ project operated by ConocoPhillips and a 24.58% stake in the Fort Hills Mine project. The midstream and trading businesses in Canada would be included. Total stated that the oil sands assets do not align with their emissions goals, and instead they would retain a minority equity interest in the proposed TSX listed entity.

The stated cash flow for the oil sands assets is US$1.5 billion (Cdn$2.04 billion) for 2022.

Teck holds a 21.31% stake in the Fort Hills project, operated by Suncor. Teck reiterated previous statements about the option to spin off or divest the Fort Hills asset if they did not feel the value was being reflected in Teck’s share price.

The operational challenges seen at Fort Hills appear to have pushed TTE and Teck to exit the project. After beginning production in 2018, the project has been hampered by curtailment in Alberta, the outbreak of the coronavirus pandemic and operational challenges. For Surmont, the asset has had strong performance and we expect a long-term SOR of 2.3, which is among the top performers. While the oil sands are progressing on their goal of net zero by 2050 through projects such as the Pathways Alliance, the rate of improvement may not be enough to fit into the asset mix of TTE. We model the potential TTE entity producing just over 100,000 b/d, with estimated cash flow of US$1.533 billion. The valuation sits at US$6.15 billion, although the entity would likely see a significant discount in the market. We model Teck’s interest in the Fort Hills asset at US$1.9 billion with cash flow of US$477 million and production of roughly 34,000 b/d.

Update on 26 October: Teck Resources exited its Fort Hills position with a sale to Suncor, rather than pursue the spin-off route.

n TotalEnergies and Teck indicate potential spin-off

of oil sands assets

Both TotalEnergies (TTE) and Teck Resources released separate public statements, indicating intent to potentially spin off their Canadian oil sands assets.

SCOTT NORLIN, GIT

BRANDON MYERS

Research Analyst, Upstream Canada

Senior Analyst – Lower 48 Upstream

Scott joined the Canadian Upstream Research team at Wood Mackenzie in June 2019. He is responsible for providing financial asset valuation and objective commercial analysis on company and play activity across Canada. His coverage ranges from North American large caps to junior private producers.

He also covers CNRL and Cenovus for the corporate analysis team, providing high level company valuation and strategy analysis.

Brandon is a senior analyst with our Lower 48 research team. Having joined Wood Mackenzie in 2017, he has worked on the integration of subsurface data with L48 research and conducted research into every major unconventional play in the US and Canada.

DISCLAIMER – THE VIEWS AND OPINIONS STATED BELOW ARE BASED ON WOOD MACKENZIE’S DATA, SOURCED FROM PUBLIC SOURCES ACROSS THE GLOBE AND OUR PROPRIETARY TOOLS SUCH AS LENS.

RESERVOIR ISSUE 1 • JAN/FEB 2023

23

24 R E S E R V O I R I S S U E 1 • J A N / F E B 2 0 2 3

THANK YOU TO ALL THE CSPG SPONSORS TITANIUM

PLATINUM

GOLD

S I LV E R

BRONZE

CORPORATE SUPPORTERS Belloy Petroleum Consulting Cabra Consulting Ltd. SeisWare Spartan Delta Corp.

McDaniel & Associates

Consultants Ltd. Pason System Canamera Coring RIGSAT Communications Barreleye Tools

Schlumberger Technology Corporation Earth Signal Processing Ltd. Pulse Seismic Inc Sigma Explorations

Whiskey Jack Resources Advanced Logic Technology Santos Inc. Eucalyptus Consulting

R E S E R V O I R I S S U E 1 • As J A of N /January FEB 20 2 3 2023.

25 1st,

Dedicated to supporting its members since 1927, the CSPG continuously offers new opportunities to enhance their skills and enrich their experiences, from events to publications to receiving grants to awards and much more. Join CSPG, and:

Be part of the science.

Be part of the legacy.

Be part of CSPG.

• Benefit from member discounts on all conferences, luncheons and webinars • Enhance your technical skills through our revamped educational program • Attend more than 20 free technical talks offered every year • Have fun checking out rocks through our field trips • Engage with specialised CSPG communities • Advance your technical knowledge through peer reviewed papers in the Bulletin of Canadian Petroleum Geology and articles in the digital Reservoir magazine • Learn new skills and expand your professional network by volunteering with any of CSPG’s programs • Share your experiences through CSPG’s upcoming mentorship program • Build your professional brand through our communications opportunities • Receive grants and awards for your distinguished work

Join today! www.cspg.org