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Persistently low natural gas prices have operators shifting well licensing and drilling activity to liquids-rich formations in Alberta, with the Kakwa region situated in the northwest between Grande Prairie and Whitecourt a main focus for development.
The Kakwa area has seen 740 wells drilled year to date, with 312 wells targeting the Montney and 110 wells targeting the Duvernay. The remaining 318 wells include multilaterals projects and conventional Deep Basin development.
Veren Inc. has been the top Kakwa operator in 2024, with Canadian Natural Resources Limited, Tourmaline Oil Corp. and ARC Resources Ltd. following closely behind.
Operators are also making a quicker turnaround on licences as they shift drilling from dry gas areas to the Kakwa area, with 801 wells licensed to date in 2024 and nearly half of those (367) already being drilled.
A total of 555 wells were brought on production at Kakwa so far this year, which included 294 Montney wells and 92 Duvernay wells.
ARC Resources, the country’s largest condensate producer, is the dominant Montney producer at Kakwa after acquiring Seven Generations Energy in early 2021. ARC reported average Kakwa production of approximately 180,000 boe/d in the third quarter (53 per cent crude oil and liquids and 47 per cent natural gas).
In the first nine months of 2024, ARC drilled 40 wells at Kakwa and completed 50 wells. In 2025, it plans to invest approximately $800 million to sustain production between 170,000 and 175,000 boe/d.
Tourmaline has been actively working to improve liquids productivity across the Deep Basin stack, including its Kakwa-Smoky-Resthaven Falher/Wilrich development, the company said in its third quarter report.
Operators have fractured 261 wells so far in 2024 at Kakwa
Frac size stacks up in typical fashion with the Duvernay representing the largest fracs completed, with nearly 9,000 tonnes per well average frac size, followed by Montney/Doig and a mix of Deep Basin wells in the bottom of the list at around 2,000 tonnes per well.
Operators remain focused on lowering costs and driving productivity
- ARC expanded inter-well spacing in the Montney to 175 metres from 135 metres in 2021, resulting in a 17 per cent increase in productivity, while requiring fewer wells to sustain production resulting in lower sustaining capital costs.
- In 2023, it began targeting wells to the Middle Montney, allowing it to produce both the Upper and Lower Montney as a single layer. Targeting the Middle Montney has resulted in a seven per cent improvement in productivity with the same number of wells, the company said.
Veren is active in both the Montney and Duvernay
- In the Duvernay, it is now landing wells 26 metres below the Duvernay top to optimize fracks and ultimately stimulate more rock per well, the company reported.
- It has also extended average lateral lengths by almost 15 per cent to 3,300 metres from 2,900 metres, while tightening stage and cluster spacing, and increasing fracture intensity.
Combined, the shift in well design has improved production by 30 per cent compared to wells drilled prior to 2021. Well costs have declined by 20 per cent, due to fewer drilling and completion days.
The Kakwa region’s shift towards liquids-rich formations amidst persistently low natural gas prices has led to significant advancements in drilling and production efficiency. Operators like Veren, ARC Resources and Tourmaline have not only increased well productivity but also optimized costs through innovative drilling techniques and strategic investments. As the industry continues to adapt to market conditions, the Kakwa area stands out as a key hub for sustainable and profitable resource development in Alberta.
Bruce Hancock is Director, Technical Advisory Group, at geoLOGIC systems ltd. He has over 40 years’ experience in oil and gas exploration, development, and production.
