Updated May 2022
The number of new gas wells placed on production1 in 2021 increased by 34 per cent from 2020, following three consecutive annual declines. A significant growth in prices of natural gas and natural gas liquids (NGLs) and a quick demand recovery in 2021 resulted in a solid growth in capital spending and an increase in new wells placed on production.
Figure S5.5 shows the number of new natural gas wells placed on production and the Alberta plant gate price.
Well Activity in 2021
In 2021, 789 natural gas wells were placed on production in Alberta (Table S5.1). Nearly 92 per cent were horizontal wells, of which 98 per cent were completed using multistage fracturing (MSF), a share that has nearly doubled in the past decade. These wells use long legs to reach across a larger section of the formation, which increases their productivity.
Nearly three-quarters of all horizontal MSF (HMSF) new wells placed on production in the province were in the Foothills Front region, followed by the Northwestern region (Petroleum Services Association of Canada [PSAC] areas 2 and 7). These areas of the province have the highest levels of NGLs content in the raw gas stream and the highest productivity rates.
Eighty-four per cent of all HMSF wells, or 597 wells, targeted
- the Montney Formation (282 wells),
- the Upper Manville Formation (258 wells), and
- the Woodbend Group, including the Duvernay (57 wells).
Vertical wells typically target shallower formations with lower liquids content and generally have much lower productivity rates than horizontal wells. New vertical wells in the province in 2021 were primarily located across the Central, Foothills Front, and Southeastern regions of the province (PSAC areas 5, 2, and 3). New vertical wells placed on production as a share of all new wells placed on production slightly increased in 2021 but remained below 10 per cent, indicating producers are focusing on horizontal wells.
Figure S5.6 shows the number and distribution of wells commencing production in 2021 by PSAC area.
Forecast for 2022 to 2031
The number of wells placed on production is expected to steadily grow in 2022 and over the forecast period. Higher natural gas and NGLs prices and a positive outlook for natural gas demand underpin this increase.
We estimate 1070 new wells to be placed on production by the end of the forecast, representing a 36 per cent increase from 2021. Over 82 per cent of the new additions will be HMSF wells and concentrated in the Foothills Front (PSAC area 2) (including new shale gas wells) and the Northwestern region (PSAC area 7).
These areas will continue to be the focus of new gas developments in the province. High liquids content of the gas and high productivity for new wells are key to their appeal, as well as access to and availability of processing and transport infrastructure and continued consolidation of operators in the areas.
1 Wells that have been physically connected to gathering infrastructure and are reporting production. This includes newly drilled wells that have been placed on production and recompletions into new zones of existing wells.