Canadian Deep Basin operations overview resource play

spring 2011
our operations | our plans | our community involvement
connecting
with your community
Welcome to Connecting with your
community. We hope you find
this newsletter valuable in learning
about our activity in the Alberta
Canadian Deep Basin
operating area. We look
forward to continuing to build
and maintain lasting relationships
in the communities where we
work and live.
Canadian Deep Basin
operations overview
The Canadian Deep Basin Business Unit (BU)
straddles the Alberta and British Columbia border and
is responsible for developing the Cutbank Ridge and
Bighorn resource plays. Encana has the expertise to
extract natural gas from deep basin tight gas formations
using the latest technology in horizontal drilling and multizone hydraulic fracturing. Our operations in this area
extend from the South Peace region in British Columbia
and Alberta, to Grande Cache into the Yellowhead region
of Alberta’s eastern slopes.
In our Bighorn operating area in west-central Alberta,
we have about 460,000 net acres of land. Our primary
producing properties in this resource play include Kakwa,
Resthaven and Red Rock which are located within the
Grande Cache region. New wells in this area produce on
average two million to five million cubic feet per day of
sweet natural gas. To put this into perspective, one day’s
production from this area (about 260 million cubic feet)
a new energy renaissance
Encana uses a standardized approach called
the resource play hub to develop its resource
plays. This means bringing its land, technology,
manufacturing practices and human capital
together in a strategic, innovative approach
that moves resource plays into commercial
production. This is done in a repeatable,
transferable manner with minimal
environmental impact.
would meet the natural gas needs of about 2,300 Alberta
homes for one year*. In 2011, we expect to maintain
a similar level of development to that of 2010 in the
Bighorn region, which includes drilling of 50 – 70 wells.
Encana’s Peace River Arch operating area includes
our properties in the Wembley/Pipestone, Sexsmith,
Beaverlodge, Hythe and Gordondale region. Most of
the gas produced in the region is processed through
the Hythe and Sexsmith plants. In 2010 we drilled
seven wells in this area. For 2011 we expect to drill
about 12 new wells.
Our development plans depend on a number of variables
including budget, weather, and global market conditions.
*Source: www.energyalberta.ca – based on 120GJ/home/year
resource
play hub:
an industryleading
approach
When community members and landowners are
speaking with Encana representatives, you may hear
us use the term resource play hub and may not be
familiar with what the term refers to.
Encana’s resource play hub is the low-cost, highgrowth production model for a dynamic, everchanging natural gas industry. Some of the highest
levels of capital and operating efficiency are achieved
when we create these economies of scale by
leveraging the technical expertise of our teams
across North America.
On the technical side, the resource play hub is our
disciplined approach to move resource plays into
commercial production in a repeatable, transferable
manner using enterprise-wide collaboration and
yielding consistently reduced costs, and improved
safety and environmental performance. As a culture,
it encourages teams to continuously improve and
innovate while sharing their knowledge with other
teams, so that we collectively learn in parallel and at
an accelerated pace.
www.encana.com
spring 2011
Edson
remediation
project
Last summer a successful remediation and surface
reclamation project was completed within the
Town of Edson. An environmental site assessment
(ESA) conducted by Encana between 2007 and
2010 identified contamination in the soil, which was
inherited from a former company.
Like many of our stakeholders, we live and work
in the communities where we have operations.
We care about the impact of energy development
on the community. The project incorporated the
Courtesy MattersTM program into the design with
pre-work meetings with the community and
a presentation to town council.
This included several kick-off meetings, doorto-door information sharing with impacted
homeowners and abbreviated work days to
coincide with homeowners’ schedules and school
bus hours. The project started in mid July with
removal of all impacted soil. A full-time flagging
crew was present onsite to ensure safe access
for local residents of the community during
remediation efforts. Work was completed on
schedule in early October.
natural gas fuels jobs
Clean, abundant, affordable natural gas fuels more than
water heaters. It also fuels local employment, contributing
to the economic sustainability of this area.
The natural gas industry accounts for more than
16 percent of Alberta’s total employment. In fact, with
over 320,000 total jobs linked to the natural gas industry,
Alberta is clearly leading the way in job creation. In our
Alberta-based Canadian Deep Basin operations, Encana
has more than 196 employees and relies on approximately
193 service providers and third-party contractors.
The first ever study to measure the impact of natural gas on
the Canadian economy was released on February 16, 2010
by IHS Global Insight. It found that every province has jobs
tied to this clean, abundant and affordable resource – the
core business focus of Encana.
“Natural gas operators contribute significantly to the local
economy,” says Mike Graham, Executive Vice-President &
President, Canadian Division. “Not only that, but natural
gas is also contributing to the changing nature of North
America’s clean energy needs.”
Completion of the Kakwa Reservoir Project provided a range of additional benefits for stakeholders and local
wildlife. Environmental considerations are built into all of our projects and we continually apply new technologies
and innovation to lessen our environmental footprint.
Engaging local stakeholders began early in the planning stages with Alberta Environment and local Aboriginal
groups which supported the project at the onset. Discussions with Alberta Sustainable Resource Development
helped us identify the preferred location for the reservoir to accommodate natural run-off in wet years.
Two phases of development included:
ƒƒ building an earthen dam and a reservoir with a capacity of 65,000 m3
ƒƒ taking advantage of natural drainage
ƒƒ building a pipeline and truck loading station
ƒƒ diverting supplemental water; the reservoir overflow is designed to flow back into the original drainage course
Monthly and quarterly meetings are used to share
Encana’s operational plans. Another change arose out
of the Safety Stand Down theme a number of years
ago which encouraged all workers to identify safety
hazards and if appropriate, work could be halted without
any repercussions until the hazard was removed or
addressed. Hazard identification rates have increased
dramatically with everyone getting involved including the
drilling, completions and operational groups.
ƒƒ collecting water flow data and fishery studies from the Kakwa River
In addition to supporting natural gas development, the completed reservoir is also a major source of accessible
water to assist the forestry service with firefighting efforts if required. Traffic volume from water hauling trucks
has been reduced, lowering road safety hazards and potential danger to area wildlife. The standing water in the
reservoir also provides a new wildlife habitat for local and migratory birds.
“Committed to responsible natural gas development”
Our safety performance demonstrates our leadership
and commitment to safety which can only be sustained
through continuous improvement. Our goal is to ensure
an incident-free workplace.
Just a safety reminder to:
HigHwood
Proof #
1
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Ad
Studio
Prod Mgr
writer
ACCount
www.encana.com
OF ALBERTA’S EMPLOYMENT
The building of the Kakwa Water Reservoir was identified as a means to provide an alternate water source to
support natural gas development activities and reduce habitat disturbance for the abundant fish and wildlife in the
area. Previously, water was hauled along Highway 40 from Grande Cache to Kakwa, creating increased traffic
volume for the local community, increased air emissions and frequent road hazards for motorists and local wildlife.
“We’ve seen a positive shift in the last few years as we’ve
become focused on achieving a goal of zero recordable
injuries,” says Kerry Mowbray, Lead, Operational Safety.
Mowbray attributes the steady improvement to a number
of factors; specifically, using consistent service providers
to complete work on behalf of Encana and improving
communications between service providers and the
company. “The work crews know Encana’s safety culture
and expectations. We know we’re all working as part of
one unified team using safety as the cornerstone for our
work practices and procedures.”
• 865-2 • AB 1 Call • Call Before You Dig Banner Ad • 7x2.3125” • 4-color • Manning Directory • July 06
16 PERCENT
Our water resources are critical for all of us and essential to our communities. Water is important for the
development of energy, including natural gas, which is why we go to great lengths to manage this valuable
resource efficiently.
Aligning goals and objectives, communicating regularly
and ensuring our safety focus is put into practice means
that both employees and contractors in the Canadian
Deep Basin Business Unit are improving the safety culture
from a number of different angles.
www.alberta1call.com
THE NATURAL GAS INDUSTRY ACCOUNTS FOR MORE THAN
Kakwa Water Reservoir
benefits all
safety strategies
for success
1-800-242-3447
If you would like to learn more about the natural gas industry’s
impact on the Canadian economy, please visit
www.anga.us/learn-the-facts/economy/Canada-benefits
AB1CALL
CLient
our operations | our plans | our community involvement
being a good neighbour
“Courteous, respectful behaviour is the way we
do business at all levels of our organization, from
management in Calgary to our people working in the
field. Courtesy MattersTM is a collaborative approach to
finding solutions and requires commitment every day
from our employees, contractors and the community,”
says Mike Forgo, Vice-President, Business Services &
Stakeholder Relations.
It’s not enough to just say that we
respect our neighbours; we have to
demonstrate it through real actions
and real progress.
Whether it’s informing residents of upcoming rig moves,
using dust suppression in front of residences during heavy
equipment moves, ensuring lease sites are clean and
free of debris and garbage, or monitoring operational
noise levels and addressing associated noise concerns,
it’s simple actions everyday and a commitment from our
employees and contractors that make the difference to
our communities.
That’s what sets our Courtesy MattersTM program apart.
We work hard every day to reinforce the core program
1 BILLION CUBIC FT OF NATURAL GAS/DAY COULD FUEL
principles by fostering dialogue and addressing concerns
related to our operations.
We also work with our contract and service companies
to ensure they understand the principles of the program
and their responsibility to ensure their workers meet the
expectations of both Encana and the people who live in
the area. Service providers and their employees have
been introduced to the Courtesy MattersTM program
through information sessions at their place of work.
Northern Mat & Bridge Ltd., which hauls access and lease
mats to various locations across the Canadian Deep Basin
Business Unit, was one of the first companies to embrace
the program and work it into its business practices. “As a
Grande Prairie-based business, any program that helps to
minimize disturbance to the local community has our full
support,” says Scott Vyse, Sales Manager.
Companies who do work on behalf of
Encana have been introduced to the
Courtesy MattersTM program and our way
of doing business.
For Courtesy MattersTM concerns in your community, please
contact us at 888.568.6322 or courtesymatters@encana.com.
a collective effort
drives local food bank support
Partnering with firefighters
for food drives
Last year, Encana’s local employees and contractors
stepped up to the plate and supported the inaugural Lights
and Sirens food drive, a project led by the volunteer fire
department in the northwestern Alberta community of
Wembley. Encana staff at our Hythe and Sexsmith gas
plants organized an internal drive to collect non-perishable
items in support of the fire department’s successful efforts,
which ultimately saw more than two truckloads of goods
donated to support local families. The Grande Cache
local fire department was quick to follow Wembley’s lead
and organized a similar event collecting four truck beds full
of food for its local food bank.
Building upon the great success from 2010, a second
event was organized for this year. On April 14 donations
of 4,563 pounds of food were collected for the
Wembley local food bank, surpassing last years amount
by double. During difficult economic times, food banks
typically experience increased pressure; these food
drives were initiated to meet the increasing needs of
those community members in need of support. Special
thanks go to the local fire departments in Wembley and
Grande Cache, who allowed Encana to join in and help
collect donations from the community and deliver them
to the food bank. As well, thanks to the local Encana staff
for their efforts and contributions.
Race Against Hunger
Encana and the World Professional Chuckwagon Association (WPCA) teamed up in 2010 for the Race Against Hunger, an
initiative which benefited local food banks in the Canadian Division’s operating areas. As part of this partnership, professional
chuckwagon drivers and Encana worked with local food banks and agricultural societies in selected tour-stop locations to
raise donations of non-perishable food items for those in need. In 2010, the Grande Prairie Stompede was a great success
with a barbecue attended by 160 people including about 70 Encana employees and their families. The event gathered
more than 120 pounds of non-perishable food items and $1,500 in cash donations. This year’s Stompede event will
happen from May 24 to 29. Cash and food donations can be dropped off at the Encana Natural Gas Truck Wagon, a natural
gas-powered Dodge truck turned covered wagon. Encana will match all donations of food (valued at $2 per pound).
The Race Against Hunger program has evolved from our long partnership with the WPCA as a way for us to realize our
commitment to support rural lifestyles and enhance the communities where Encana is privileged to operate.
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1 BILLION CUBIC FT OF NATURAL GAS/DAY=
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VEHICLES AND IS CONSIDERED
CHEAPER THAN GASOLINE
why
natural gas?
We believe natural gas is the clear energy choice.
Simply put, natural gas provides a clean, affordable,
abundant supply of energy that creates jobs and
reduces emissions. Recent studies have shown
an estimated 100 years of supply to meet North
America’s changing energy needs.
Encana’s vast portfolio of natural gas leases in
major Canadian and U.S. basins is helping to create
a cleaner energy future. Opportunities to expand
natural gas use are available in both the power
generation and transportation industries.
In Canada and the U.S., more than 70 percent of
the 6.1 billion tonnes of CO2 emissions generated
annually are attributed to the transportation and
power generation sectors – where coal, oil, natural
gas, hydro, nuclear, wind and biomass make up the
current energy mix.
clean. affordable. abundant.
One example of how we can reduce emissions by
switching to natural gas is in electrical generation.
The cleaner-burning fuel produces zero mercury
emissions, 99 percent fewer sulphur dioxide (SO2)
emissions and up to 80 percent fewer nitrogen
oxides (NOx) emissions compared to coal. Plus,
it emits up to 65 percent less CO2.
Rapid technological advancements now allow for
the development of vast reserves of this affordable
resource well-suited to the demand for responsibly
produced clean energy.
spring 2011
our operations | our plans | our community involvement
Grande Cache minimizing our footprint
what is fracturing fluid?
becomes
BearSmart
Multi-stage hydraulic fracTURING
Encana has partnered with the Government of
Alberta and the community of Grande Cache
in supporting a new BearSmart program in and
around the northwestern Alberta town. The
Grande Cache area has one of the highest grizzly
bear densities in the province. The grizzly species
status has been updated lately to “threatened”.
Studies done in the area are being used to identify
the causes of bear conflicts around the town.
This information will be used to help prioritize
focus areas.
Encana values environmental stewardship as a
crucial component of community investment. The
BearSmart program really embodies stewardship
through education and prevention. Some project
initiatives could include:
ƒƒ installing BearSmart educational signage
ƒƒ supporting outreach to local schools
ƒƒ purchasing bear-resistant garbage bins
ƒƒ working with industry optimizing BearSmart
practices in the field
Grande Cache joins other Alberta communities
with existing BearSmart programs, such as
Canmore, Crowsnest Pass and Fort McMurray.
BearSmart programs are often tailored to individual
communities and rely on involvement from
Fish and Wildlife staff, volunteers, community
representatives and industry. Individual programs
are tailored to the communities.
horizontal drill
Multi-stage hydraulic
fracturing is a
controlled operation
that pumps a fluid
that is primarily water
and sand into a tight
gas formation at high
pressure in numerous
separate intervals or
fracturing stages. By
drilling horizontally
through a reservoir,
fracturing stages can
be added and gas
production for each
well increased.
FracTURING Stage
Water and sand are the primary components of the fluids
used in hydraulic fracturing. In addition third-party service
providers, in consultation with producers, use highly
diluted volumes of chemical additive to ensure effective
fracturing of the target reservoir and recovery of the fluids.
In all Encana operations, rigorous water management
and conservation is a vital part of this process. All fluids
that return to the surface are recycled or disposed of in a
regulatory agency-approved disposal well.
how is groundwater protected
during hydraulic fracturing?
high-pressure fluid
Shale formation
multi-stage hydraulic fracturing
= minimal surface land disturbance
Multi-stage hydraulic fracturing has unlocked the abundant
natural gas trapped in tight formations like the Western
Canada Sedimentary Basin. Hydraulic fracturing is a
safe and proven way to develop natural gas; it has been
used throughout the oil and gas industry for about 60
years. Encana meets, and strives to exceed, the strict
requirements for hydraulic fracturing processes set out
by government regulatory agencies, while continuously
seeking ways to improve technology and operations from
an environmental perspective.
what is it?
Hydraulic fracturing takes place during the completions
phase of our development cycle. It is a controlled
operation that pumps a fluid (primarily water) and a
proppant agent (sand) down the wellbore to the target
formation at a high pressure in multiple intervals, or
stages. The process breaks up the target formation, much
like a rock hitting a windshield, to create pathways that
allow the gas to flow from the very low permeability
reservoir toward the wellbore. If you would like to watch
a hydraulic fracturing video animation, please go to our
website at www.encana.com.
The actual fracturing operation takes place at depths
that are typically hundreds to thousands of feet deeper
than any groundwater aquifers that could reasonably be
considered a source of usable water. However, rigorous
water management and protection is a vital part of the
hydraulic fracturing process, starting with proper wellbore
design. Every natural gas well has a steel casing system
that is cemented externally to prevent hydraulic fracturing
fluids from escaping. Encana conducts field inspection and
wellbore logging to help ensure the integrity of casing
and cement systems. Encana also conducts baseline
groundwater testing programs and water management
practices at drilling locations.
“We need water. We need
energy. It’s not a question of
one or the other. It’s a matter
of using both responsibly.”
Dave Lye, Vice-President, Corporate EH&S,
Security & Corporate Responsibility
how does hydraulic fracturing
reduce our land footprint?
The more stages or intervals we are able to complete
in a horizontal well using hydraulic fracturing below the
surface, the more exposure we have to the reservoir,
increasing production from each gas well. This technique
requires fewer wells on the surface than traditionally
required while still accessing, if not increasing, the amount
of gas we produce below the surface. Fewer wells mean
a smaller footprint.
Minimal Surface Land Disturbance
Six horizontal wells (up to 15
fractures/well) equals 90 total
fractures per 1½ section of land.
BearSmart
program
The BearSmart program is a provincial initiative
to help keep people and bears safe and reduce
property damage by bears. As part of Alberta’s
commitment to manage the threatened grizzly
bear population, BearSmart is vital to helping reduce
human-caused grizzly bear mortalities. For more
information on the BearSmart program, visit
www.bearsmart.alberta.ca.
average aquifer
depth 650 feet
Aquifers are, on average, about
200 metres (650 feet) below
ground. Encana drills to vertical
depths of up to 3,700 metres
(2.3 miles), and laterally up to
2,400 metres (1.5 miles).
DRILLING DEPTH
UP TO 2.3 MILES
l ate
ral u
p to
1.5 m
The same development would
require 90 vertical wells each on a
separate 100 metre by 100 metre
(109 yard by 109 yard) pad.
iles
Community Relations Representatives: Patsy Vik 403.645.2540 patrice.vik@encana.com | Don Rowan 780.518.1004 don.rowan@encana.com