SPE 96899
Assessment and Development of the Dry Horseshoe Canyon CBM Play in Canada
P.A. Bastian, SPE, Quicksilver Resources Inc., and O.F.R. Wirth, L. Wang, SPE, and G.W. Voneiff, SPE, MGV Energy Inc.
Copyright 2005, Society of Petroleum Engineers
This paper was prepared for presentation at the 2005 SPE Annual Technical Conference and
Exhibition held in Dallas, Texas, U.S.A., 9 – 12 October 2005.
This paper was selected for presentation by an SPE Program Committee following review of
information contained in a proposal submitted by the author(s). Contents of the paper, as
presented, have not been reviewed by the Society of Petroleum Engineers and are subject to
correction by the author(s). The material, as presented, does not necessarily reflect any
position of the Society of Petroleum Engineers, its officers, or members. Papers presented at
SPE meetings are subject to publication review by Editorial Committees of the Society of
Petroleum Engineers. Electronic reproduction, distribution, or storage of any part of this paper
for commercial purposes without the written consent of the Society of Petroleum Engineers is
prohibited. Permission to reproduce in print is restricted to a proposal of not more than 300
words; illustrations may not be copied. The proposal must contain conspicuous
acknowledgment of where and by whom the paper was presented. Write Librarian, SPE, P.O.
Box 833836, Richardson, TX 75083-3836, U.S.A., fax 01-972-952-9435.
Abstract
This paper discusses how the Horseshoe Canyon coalbed
methane (CBM) play in Western Canada was converted from
an under-explored, non-commercial resource to a major
commercial play through the application and modification of
technology and analysis techniques from other basins, and
how this play is being developed today. As of December
2004, production from the Horseshoe Canyon CBM play is
estimated to be over 100 MMscfd of gas, with future
production expected to grow significantly. The first
commercial developments were completed in 2003 and 2004,
and drilling is increasing and expected to exceed 3,000 wells
per year in 2005.1
The Horseshoe Canyon CBM play covers a large
geographic area of 200 miles by 50 miles, and exists in a
large, complex vertical section with numerous coal, sand, silt,
shale and mudstone layers. In addition, the play is naturally
under-pressured, and the coal beds are mostly dry. Because of
these complex and unique characteristics, assessment of
commercial viability and development optimization can be
confusing and only applicable over small parts of the play.
MGV Energy, Inc. (a wholly-owned subsidiary of Ft. Worth-
based Quicksilver Resources, Inc.) and its initial joint venture
(JV) partner, PanCanadian Petroleum Limited (now EnCana
Corp.), discovered the techniques to achieve commerciality
and pioneered many of the practices used by industry today
for Horseshoe Canyon CBM development. In this paper, we
discuss identification of the reservoir opportunity, including
data acquisition and analysis. We describe geologic and
reservoir models, and production forecasting methods. We
also cover completion and production practices, spacing
optimization and reserves estimation procedures.
Introduction
The exploitation of Alberta, Canada’s vast coal resource has
been ongoing for many decades, but focused primarily on coal
mining. However, these mining operations, together with
water well drilling and conventional oil and gas development
activity, highlighted a potentially large natural gas resource.
Numerous geological evaluations estimate the potential CBM
resource in Alberta to be between 500 and 550 Tscf.2-4 Prior
to 2000, about 200 wells had targeted these coals for
evaluation, but no commercial successes resulted from this
effort, due to a combination of factors, including low
permeability, low gas prices and completion difficulties.5 In
addition, the Horseshoe Canyon coals were not part of these
early exploration efforts.
Beginning in late 2000, MGV (together with EnCana)
embarked on an intense effort to characterize the shallower
Horseshoe Canyon coals in Alberta, and develop the drilling,
completion and production practices necessary to turn this
untapped resource into a commercial play. During this initial
multi-year exploration phase, we drilled over 100 wells,
collected a significant amount of core data, and identified
several unique characteristics of the Horseshoe Canyon coals
that guided our decisions on how to develop this new resource.
By early 2003, MGV began producing the first commercial
CBM in Alberta’s history. By the end of 2004, the Horseshoe
Canyon coals had become a major CBM play in Alberta, with
numerous companies developing Horseshoe Canyon projects
in the corridor between Calgary and Edmonton.
Geological Setting of the Horseshoe Canyon CBM
Play
The Horseshoe Canyon formation is one of several coal-
bearing formations that encompass a large geographic area in
Alberta, Canada (Fig. 1). The Horseshoe Canyon subcrops
beneath glacial deposits on the eastern side of the formation,
and outcrops along river valleys where there are several
surface coal mines (Fig. 2). To the west, north and south,
Horseshoe Canyon coals thin and become increasingly shaley.
Horseshoe Canyon coals were formed in a coastal plain
environment on the margins of the Bearpaw Sea. Paleo-
shorelines run in a northwest-southeast direction sub-parallel
to the present day Rocky Mountains. Fluctuations in relative
sea level resulted in multiple thin seams interbedded with
continental and shallow-marine shales, and shoreface and
fluvial sandstones. These coal seams vary in lateral
continuity. In some cases, individual coal seams can be
mapped over 20 to 30 miles in a depositional strike direction,
and up to 10 miles in a depositional dip direction. In other
cases, coal seams pinch out within a mile.
The Horseshoe Canyon CBM play includes the numerous
thin coal seams found in the large stratigraphic interval from
2 SPE 96899
the top to the base of the Horseshoe Canyon Formation, plus
the uppermost coals of the Belly River Group, the Lethbridge
coals. This large stratigraphic interval varies in total thickness
from 400 m to 600 m, and can contain between 2 m and 30 m
of total net coal thickness. We typically divide these coal
seams into six informal coal groupings (Fig. 3). The bulk of
the coal is found in the lower strata from the Drumheller
down.
In some areas, the interbedded sandstones (shown in Fig.
3) are conventional targets and can be commercially exploited
on their own. However, these sand intervals are more
commonly poor quality reservoirs that are exploited and co-
mingled as part of the CBM completion in a well, and
represent less than 20% of the total production from a co-
mingled coal and sand well.
MGV cored and canistered numerous Horseshoe Canyon
coal seams in several wells as part of its initial exploration
program with Encana. Typical measurements and laboratory
analyses included canister desorption tests, density
determination, proximate analysis for ash and moisture
content, and a limited amount of coal rank and maceral
analysis. We find that the coals are largely vitrinite rich
(typically more than 90%). Vitrinite reflectance
measurements place the coal rank of Horseshoe Canyon coals
at Sub-bituminous A-C (Fig. 4). The face cleats are generally
well developed, while the butt cleats are generally poorly
developed, and there is no significant mineralization of the
cleats. Given the large number of seams, ash content varies
widely. Individual seams can have ash contents ranging from
10% (very clean) to over 35%, and in some cases, higher ash
contents are possible if the coal sample also contained some
carbonaceous shale material. Moisture content is consistently
between 10% and 20%.
The Horseshoe Canyon CBM Play - A Unique, Dry
Coalbed Methane Reservoir
Until now, most economically attractive CBM reservoirs have
been characterized by a single (or possibly a few) very thick
coal deposits that are relatively shallow, have high
permeability and must be dewatered. A prime example of this
type of CBM reservoir is the Powder River Basin, located in
the state of Wyoming, USA. Although these coals are low
rank, the thickness of these coal deposits (up to 100 ft in a
single coal seam) yielded sufficient resource in place for a
commercial play, and the shallow depth and high permeability
reduced operating costs and allowed effective dewatering.
In Alberta, Canada, the Horseshoe Canyon coals are very
different from the coals of a typical CBM basin like the
Powder River, and have several unique and important
characteristics, including
• 10 to 30 or more thin seams, rather than one, or a
few, very thick seams,
• Broad depth (and completion) interval,
• Dry coals (no water in the cleats), and
• Severe under-pressuring.
Many thin seams, broad depth interval. The Horseshoe
Canyon coal section contains dozens of very thin seams,
spread out over a 300 to 500 m depth interval (Fig. 3). Seam
thickness ranges from 0.1 m to about 2.5 m, with the typical
seam being less than 0.5 m thick. In the context of a normal
CBM reservoir development, the effective dewatering of
dozens of thin coal seams over a broad depth interval would
be considered extremely difficult, if not impractical. In
addition, the generally accepted knowledge that the Horseshoe
Canyon coals are low rank meant that even if dewatering were
feasible, but difficult, perhaps the resource was insufficient to
justify a full-scale development.
Dry and under-pressured coals. In late 2000, we began
testing our first Horseshoe Canyon coal seams with a standard
water injection falloff test, a common practice in the industry.
Results from these initial tests were very discouraging because
it was very difficult to inject water into the coals. Normally,
this indicates an extremely low permeability. To restore some
communication with the reservoir, we then tried a technique
that had been used previously in the Appalachian Basin: high-
rate, dry nitrogen injection.6 These nitrogen injection
treatments resulted in methane production from the coals, and
led to the discovery that the Horseshoe Canyon coals are dry,
and very sensitive to liquid exposure. Fortunately, the
discovery that the Horseshoe Canyon coals are dry over a
large geographic area meant that dewatering would be
unnecessary, resulting in significant savings of capital and
operating costs.
However, we also discovered that the Horseshoe Canyon
coals are severely under-pressured, and that pore pressure
gradients varied vertically and laterally. It was well known
that the shallow, conventional reservoirs in the central Alberta
region of the Western Canadian Sedimentary Basin are under-
pressured, but the extent and magnitude of the under-
pressuring in the Horseshoe Canyon coals had not been well
quantified.
Fig. 5 shows the magnitude of pore pressure gradients we
have encountered in the Horseshoe Canyon coals. Pore
pressure gradients can range from less than 0.10 psi/ft to about
0.23 psi/ft, which is significantly below the normal freshwater
hydrostatic gradient (0.433 psi/ft). In addition, Fig. 5 shows
that pore pressure gradients vary from seam to seam, and do
not necessarily increase monotonically with depth.
Data collection and analysis. Some of the unique
characteristics of the Horseshoe Canyon coals translate into
economic advantages that make these coals a viable,
commercial resource, but they also present several challenges
for collecting data and evaluating the Horseshoe Canyon CBM
resource potential.
We used special data collection methods in three technical
areas to gather information about the Horseshoe Canyon coals:
(1) coring, (2) pressure transient and pore pressure testing, and
(3) production profiles using spinner logs.
Coring. Coring and core analyses are key components to
evaluating an unconventional resource like CBM. Core
analysis usually establishes the rank and gas content of the
coals, which leads to a proper assessment of resource in place.
Since the Horseshoe Canyon formation contained multiple,
thin coal seams, it was necessary to collect a significant
amount of core for this project. We needed good vertical and
areal coverage to properly understand the distribution of the
resource in place. For example, during the initial exploration
SPE 96899
phase of this project, we collected and analyzed over 38 m of
core in the area northeast of Calgary known as the Palliser
block.
For coring the Horseshoe Canyon coals, we used a
wireline retrievable coring system to quickly return the cores
to surface, which reduces the amount of lost gas as the core
makes its way to the surface. Once samples were selected and
canistered, we allowed some samples to remain canistered for
weeks or months to better understand the desorption rate of
these low rank coals.
A typical core analysis of a Horseshoe Canyon coal seam
included measurements of
• Gas content (in situ and dry, ash-free basis),
• Ash and moisture content,
• Coal density, and
• Gas composition.
On select core samples, additional analyses include coal
maceral composition, and vitrinite reflectance for determining
coal rank.
Results from our core analysis of the Horseshoe Canyon
coals show a wide range of values for key measurements (i.e.,
ash content, gas content, density, etc.), both vertically from
seam to seam in a wellbore, and laterally between wells. This
variability is consistent with other aspects and properties of
the Horseshoe Canyon coals, making this a very complex
CBM play.
Pressure transient and pore pressure testing. Since each
Horseshoe Canyon CBM well may have dozens of perforated
coal seam intervals, it was impractical to test every seam in
every well. Furthermore, since we could not inject water into
the Horseshoe Canyon coals, we needed to develop other
options for estimating initial pressure, permeability and skin
factor.
We attempted injection falloff tests using pure nitrogen
gas, but determined that the stress sensitivity of the cleat
system in the coals, and non-Darcy flow effects during the
injection period, resulted in difficult and non-unique
interpretations. We also considered using very low injection
rates for these tests to mitigate the problems mentioned above,
but found that we could not accurately measure such low gas
injection rates at the surface. Considering the problems we
were having with injection-falloff tests, we began
experimenting with conventional drawdown-buildup tests.
A conventional drawdown-buildup test had several
advantages that were important for testing Horseshoe Canyon
coals. Since the coals are dry, we did not have concerns with
multi-phase flow, and expected the interpretations to be
relatively straightforward. Also, a drawdown-buildup test
would produce native reservoir fluid (i.e., methane gas) at a
rate consistent with the natural flow capacity of the reservoir,
reducing or virtually eliminating the stress-sensitivity and non-
Darcy flow effects associated with the high-rate nitrogen
injection falloff tests.
Since a typical Horseshoe Canyon completion involved
many (sometimes dozens) of open coal seams, we designed
drawdown buildup tests that isolated individual coal seams in
a well, testing each isolated interval in sequence (Fig. 6). This
simultaneous, multi-test design resulted in successful pressure
transient tests in a single wellbore, yielding good data and
3
interpretable results. In addition, we adopted this test design
for pore pressure isolation testing to quantify the complex
pressure regime that exists in these reservoirs (see Fig. 5).
However, testing CBM wells this way was significantly more
expensive than a typical injection falloff test, and in some
cases, required weeks or months to complete.
Production profiling. Considering the complexity of this
reservoir, it would be difficult to predict how much production
is coming from any particular interval in a well. However, we
needed to couple interval production rates and profiles to other
well information, such as depth, thickness, gas content and
pressure, to better understand the potential of this resource.
Production profiling using spinner logs was a cost
effective solution to this problem, and has become part of our
routine operating practice in many of our Horseshoe Canyon
CBM wells. Results from spinner logs are integrated with
other regional and well data to estimate the permeability of the
coal intervals, and to properly distribute productivity to layers
in our predictive models.
Completion and production practices
The most common practices used in the completion,
stimulation and production of water-saturated coals are: (1)
hydraulic fracturing using proppant and gelled water or foam,
and (2) dewatering using artificial lift. However, the layered,
dry and under-pressured characteristics of the Horseshoe
Canyon coals required us to replace this conventional wisdom
with a completely different set of operating practices.
Stimulation using nitrogen and coiled tubing units. A
typical Horseshoe Canyon CBM well is drilled with water or
air, cased and cemented, and then perforated to open the coals
to the wellbore. But, the unique nature of the Horseshoe
Canyon coals precluded traditional stimulation practices. We
had already established that injecting water into the coals was
very damaging, which eliminated water-based fracturing
fluids, and even high-quality foam systems. And, the low
reservoir pressures in these coals meant that there may not be
enough natural energy to flow back the fracturing fluid after
stimulation. Without water or some other viscous fluid, we
could not transport proppant into the coal seams to stimulate
the wells. Finally, it was difficult to effectively stimulate
(conventionally) the large number of open coal intervals in a
typical Horseshoe Canyon well.
Recognizing the damaging effects of liquids on these coals
and the practical limitations of conventional stimulations, we
turned to a technique that had been used previously in the
Appalachian Basin: high-rate, dry nitrogen injection
stimulations.6 By using coiled tubing units equipped with a
down hole fracturing isolation tool, we could individually treat
each of the open coal seam intervals in a well, ensuring that
every completion interval received some amount of
stimulation.
During the exploration phase of this project, we used a
two-step completion program to evaluate stimulation
effectiveness: 1) a small-volume, lower-rate dry nitrogen
injection “breakdown” treatment, followed by 2) a high-
volume, high-rate dry nitrogen stimulation treatment. We
typically flared wells after each of the two stimulations to
evaluate the effectiveness of each style of treatment. Fig. 7
4 SPE 96899
compares the post-treatment production performance of each
the two stimulation treatments in one of our exploration wells.
This figure shows that the initial “breakdown” treatment
resulted in some gas flow from the coals in the well, but that
the subsequent high-volume, high-rate treatment resulted in a
250% productivity increase. We applied this two-step
stimulation technique to most of the wells in our initial
exploration program, and saw productivity gains of 200% to
400% as a result of the second stimulation treatment.
Eventually, we dropped the “breakdown” treatments from our
completion program, and currently perform only the high-
volume, high-rate nitrogen stimulations to complete our wells.
No dewatering or artificial lift needed. A typical CBM
development might have one or two primary coal seams that
must first be dewatered before gas production can begin.
Since the Horseshoe Canyon coals are dry, dewatering and
artificial lift are unnecessary, representing a significant cost
savings for any Horseshoe Canyon CBM development.
However, the many dry, thin coal seams must be co-mingled
in a well to achieve commercial production rates.
All of these factors make operating a Horseshoe Canyon
CBM well much more economic. Following nitrogen
stimulation, Horseshoe Canyon CBM wells are placed on
production almost immediately, with nothing more than
production casing in the wellbore and a wellhead at the
surface. For large scale projects, wells are tied-in to a
common, low-pressure gathering system leading to a
compression facility.
Modeling reservoir performance
As the commercial success of the Horseshoe Canyon CBM
play started to become apparent, some key questions began to
emerge:
• What is the future performance and ultimate recovery
of CBM in the Horseshoe Canyon formation?
• What is the best way to develop this new CBM play
(i.e., optimum well spacing)?
• How do we answer these questions confidently using
exploration-phase geologic data and limited, early-
time well performance?
As with other large, unconventional resource basins, the
ultimate development of the Horseshoe Canyon CBM play
will involve thousands of wells, and so far, only a small
fraction of those wells have been drilled. The highly complex
nature of the Horseshoe Canyon coals has resulted in a wide
variety of well performance profiles that are not necessarily
predictable from location to location, or correlatable to
common sub-surface measures such as depth or thickness.
Any estimates of resource potential must account for this
local variability, and include the range and confidence of
expected outcomes. Traditional analysis methods, such as
volumetric or decline curve analysis, are not suitable for
analyzing such a complex reservoir, and would likely result in
conservative estimates of resource potential. Probabilistic
methods, such as Monte Carlo simulation, can help account
for the statistical variability of the Horseshoe Canyon coal
reservoirs, but lack the robust reservoir model that can
adequately forecast the production performance of such a
complex reservoir over time. What is needed is a probabilistic
method that is coupled to numerical reservoir simulation.
Monte Carlo reservoir simulation. Our solution to the
problem of forecasting Horseshoe Canyon CBM well
performance is Monte Carlo reservoir simulation (MCRS).
Fig. 8 shows the basic schematic workflow of the MCRS
process. Some main aspects of MCRS are:
• MCRS combines numerical reservoir modeling (to
address reservoir complexity) with probabilistic
methods (to address uncertainty and risk).
• MCRS preserves general trends seen in reservoir
data, while also accounting for the scatter that is
evident in those data.
• Reservoir properties are randomly sampled from
user-defined statistical distribution functions, and
combined into a realization that represents a single
well at some pre-defined spacing.
• With MCRS, each Monte Carlo iteration represents a
distinct “realization” of a single-well reservoir
simulation, with a complete rate vs. time forecast.
• Hundreds or thousands of iterations can be performed
to adequately sample all input distributions.
• Results can be consolidated into a range of rate vs.
time projections, driven by known reservoir and
geologic data.
The idea of MCRS is not new. Purvis7 demonstrated the
viability of MCRS with case histories including a CBM
reservoir, and Roadifer8 applied this technique to perform a
large parametric study related to CBM well performance.
Recently, Jalali and Mohaghegh9 discussed a simple, single-
well CBM reservoir simulator that integrates probabilistic
methods. Our MCRS process uses a standard, commercial
Monte Carlo simulation software package wrapped around a
commercial reservoir simulator.
Model construction for MCRS. Unconventional reservoirs
are sometimes described as statistical plays, where it is
recognized that
• Many wells will be drilled in the project,
• Production performance from wells will be highly
variable, and not necessarily predictable from well to
well, and
• The aggregate performance of all the wells in the
project should lead to an economically viable project.
The basic objective of MCRS is to characterize the
reservoir and production performance statistically to mimic
the development of a statistical play. To do this, we describe
input reservoir properties (tops, net pay, permeability, etc.) as
continuous ranges of possible values, determined from
available well data. Most of the time, we can use simple,
statistical distribution functions having a mean or median, a
standard deviation, and minimum and maximum values.
Figs. 9 and 10 are examples of actual well data that are
calibrated to distribution functions, and illustrate how we
convert discrete reservoir information into continuous
statistical functions. Fig. 9 is a probability plot for depths to
the top of the informal coal groups we use to describe the
SPE 96899
Horseshoe Canyon section, while Fig. 10 shows total coal
thickness for those same coal groups.
Once all the reservoir properties have been described
statistically, individual well models are constructed by
sampling the statistical distribution functions in one of two
ways:
• By sampling directly from the distribution functions
of known well data (such as tops and thicknesses
from logs, as illustrated in Figs. 9 and 10), or
• By calculating mean values from correlation
equations, and applying statistical scatter (standard
deviation) quantified from analysis of known data.
Calibrating the model. The main objective in calibrating a
MCRS model is to match the population of outputs from the
many reservoir simulation runs (initial fluids in place, rate vs.
time) to estimates derived from available field and well
information. This calibration includes both static and dynamic
data to ensure that inputs to the model are consistent with
observed sub-surface well information, and that the resultant
simulated population of rate vs. time curves is consistent with
the observed production performance of wells in the field.
During the history matching of well production
performance, we alter the distributions of reservoir parameters
to modify the model, rather than changing discrete
(deterministic) values for a particular well. Beyond that, the
calibration of the MCRS model is very similar to that of a
conventional deterministic model.
Fig. 11 presents the results of a MCRS model calibration,
showing how the average well from the MCRS simulation
closely matches the average production performance of wells
in a project area.
Forecasting performance. Once the MCRS model is
calibrated, we can forecast the expected performance of a well
or project, knowing that the forecasts are derived from models
that are consistent with our geologic characterization and field
observations. However, since we are treating the modeling
probabilistically, we are able to answer questions such as
• What is the likely distribution of initial gas in place
per well (the size of the resource)?
• How much gas will a typical well produce over time
(recovery factors)?
• What is the optimum well spacing for a particular
project area?
Additionally, we can use the results of the MCRS model to
estimate a rate vs. time profile computed at almost any
probability (i.e., P10, P50, or P90) for economic analysis and
reserve bookings.
Reserves and recovery from the Horseshoe Canyon
coals
Throughout this paper, we have discussed the very complex
nature of the Horseshoe Canyon coalbed reservoirs. This
complexity leads to a wide variability in initial well
performance, and makes it difficult to predict the long-term
performance of large-scale development projects.
5
However, by adopting a statistical approach and using
MCRS processes, we could make performance predictions that
we consider reasonable and technically sound.
Fig. 12 is an example of how our estimates of original gas
in place from well data compare to those computed from the
statistical model. This comparison is part of our calibration
process to ensure that our statistical model is properly
initialized prior to reservoir simulation.
Fig. 13 shows the 40-year, rate vs. time curves for the
average well in five different spacing scenarios for one of our
Horseshoe Canyon projects. These “type curves” can be used
to represent the average well in a large-scale development of a
statistical play. Alternatively, since we preserve the entire set
of rate vs. time forecasts from the MCRS model, we can also
select a forecast for any probability, such as P(10) and P(90).
Fig. 14 illustrates the sensitivity of recovery to well
spacing for one of our Horseshoe Canyon development
projects. For 320 ac and 160 ac well spacing, 40-year
cumulative gas recovery ranges from 1.1 Bscf per section to
over 1.4 Bscf per section, representing recoveries of 44% and
54% of original gas in place, respectively. From our analysis,
we find that the appropriate initial spacing for Horseshoe
Canyon CBM developments is project specific, and ranges
from four to eight wells per section, depending on resource in
place and initial well productivity.
MGV has used analysis results such as those shown in
Figs. 13 and 14 to perform full-cycle economic analysis,
spacing optimizations, and to help in the estimation of
reserves.
Conclusions
The Horseshoe Canyon CBM play in central Alberta is fast
becoming the largest commercial “dry” CBM development in
the world. The complex geology and layering of the reservoir,
combined with the dry and under-pressured nature of the
coals, presented unique challenges for analyzing and
developing this resource.
Special processes for completion, production and reservoir
analysis were required to properly evaluate the potential of
this CBM resource, including:
• Simultaneous, stacked, multi-seam pressure transient
and pore pressure tests,
• Stimulations using dry, nitrogen gas and coiled
tubing units,
• No dewatering, artificial lift, water handling or
disposal, and
• Statistical methods (Monte Carlo Reservoir
Simulation) for reservoir analysis and forecasting
Applying these processes during the exploration phase of
the project allowed us to make critical business decisions
regarding the viability of large-scale development of the
Horseshoe Canyon CBM resource.
By early 2003, we had begun commercial production of
Horseshoe Canyon CBM gas. Development of this resource is
accelerating, with many operators set to drill thousands of
wells over the next several years. Total production of
Horseshoe Canyon CBM from all operators now exceeds 100
MMscfd, and is expected to grow rapidly over the next several
years.
6 SPE 96899

Acknowledgements
The discovery and success of the Horseshoe Canyon CBM
play would not have been possible without the skill,
commitment and hard work of the geologists, engineers and
staff members at MGV Energy, Inc. This paper is dedicated to
all those whose individual contributions helped uncover a
world-class CBM resource.
The authors also wish to thank the management of MGV
Energy, Inc., and Quicksilver Resources, Inc. for their
considerable support in allowing this work to be published.

References
1. Zelinsky, T.: “Service Companies Will Benefit from Increased
CBM Activity Next Year,” Nickles Daily Oil Bulletin, Dec. 17,
2004.
2. Beaton, A.P.: “Production Potential of Coalbed Methane
Resources in Alberta,” 2003 EUB/AGS Earth Sciences Report
2003-03.
3. Canadian Gas Potential Committee, 2001 Report, “Natural Gas
Potential in Canada”.
4. Hughes, J.D.: “In Situ Assessment of Coalbed Methane
Resources in the Alberta Plains Volume I – Unconstrained
Cases”, Geologic Survey of Canada report to MGV Energy,
Inc., 2001.
5. “Canadian Coalbed Methane Forum General Catalogue of CBM
Data in Alberta and British Columbia (as of January 1, 1993),
Volumes I and II,” Sproule Associates Ltd, report to Canadian
CBM Forum, January 1993.
6. Stidham, J.E., Tetrick, L.T. and Glenn, S.A.: “Nitrogen Coiled-
Tubing Fracturing in the Appalachian Basin,” paper SPE 72382
presented at the 2001 Eastern Regional Meeting, 17-19 October,
Canton, Ohio
7. Purvis, et. al.: “Coupling Probabilistic Methods and Finite
Difference Simulation: Three Case Histories,” paper SPE 38777
presented at the 1997 SPE Annual Technical Conference and
Exhibition, 5-8 October, San Antonio, Texas
8. Roadifer, et al.: “Coalbed Methane Parametric Study: What's
Really Important to Production and When?,” paper SPE 84425
presented at the 2003 SPE Annual Technical Conference and
Exhibition, 5-8 October, Denver, Colorado
9. Jalali and Mohaghegh: “A Coalbed Methane Reservoir
Simulator Designed and Developed for the Independent
Producers,” paper SPE 91414 presented at the 2004 SPE Eastern
Regional Meeting, 15-17 September, Charleston, West Virginia

SI Metric Conversion Factors

ft × 0.3048 E+00 = m
ft3 × 2.831 685 E–02 = m3
psi × 6.894 757 E+00 = kPa
ac × 4.046 781 E–01 = ha
sec (640 ac) × 3.861 004 E–01 = km2
SPE 96899 7

Fig. 1 – Distribution of coals in Alberta, Canada, including the Horseshoe Canyon formation (courtesy of Alberta EUB and AGS).
E d ge of D eform e d B e lt

D ru m he lle r V alle y
(R e d D e er R iver)

W e st East
y C oal
A r d le om p son
on - Th
S co llard F m C a rb ver
W ea e
b r id g owk
i
H o rses ho e
e lle r L e th Pak
C an yo n D r u m h Coa
l
r
al Tabe s
Bas S h a le n v il
l
ra d o M an
B elly R ive r C o lo e
Lea P
a rk
C o a ls
G ro u p M c K a y n v i ll e Low
er
r M an
M ilk R iver U ppe z o ic
o
P a le
M an n ville G p
Fm
s s in
K o o te n a y G p N ik a n a
F ernie G p

Fig. 2 – Schematic cross-section of coals in the Western Canadian Sedimentary Basin.

8 SPE 96899

Fig. 3 – Groupings used to characterize the coals in the Horseshoe Canyon formation.

North America Vit. Ro. %

0.15
Peat
Low

0.3
Lignite
• Measured Ro values between
Sub-Bit. C 0.4 0.39 and 0.56
B
0.5 • Rank: Sub-bituminous A-C
C A 0.6
High Vol

B 0.7
Bit.

0.8
A 1.0
Medium

1.2
Med. Vol Bit.
1.4

Low Vol Bit. 1.6

1.8
Semi-Anthracite

Anthracite 3.0
High

4.0
Meta-Anth.
Modified after ASTM

Fig. 4 – Coal rank of Horseshoe Canyon coals is Sub-bituminous A-C.

SPE 96899 9

Pore pressure gradient, psi/ft 0.5

0.4
Normal freshwater
gradient

0.3

0.2

0.1

0.0
200 250 300 350 400 450 500 550 600
Depth from surface, m
Fig. 5 – Pore pressure gradients demonstrate under-pressuring in Horseshoe Canyon coals.

Packer with tandem

gauges

Horseshoe Canyon
perfs
Bridge plug to isolate
perfs

Fig. 6 – Schematic of multi-zone pressure transient test in a Horseshoe Canyon CBM well.
10 SPE 96899

400

350

300
Gas rate, Mscfd

250
Post-stimulation
rate (~ 130 Mscfd)
200

150

100

50 Post-breakdown rate
(< 50 Mscfd)

0
0 50 100 150 200 250 300 350
Time, days
Fig. 7 – Example comparison of production performance after “breakdown” and stimulation.

Monte Carlo Sampling and Simulation Engine

Sample distribution
functions for
reservoir properties

Build numerical
One simulation input file
Monte
Carlo
Iteration
Run numerical
simulation

Results post-
processing and data
capture

Fig. 8 – Workflow schematic of Monte Carlo reservoir simulation process.

SPE 96899 11

100
Symbols - well data
150
Depth to middle of coal group, m

Lines - distribution
200 function fit

250

300

350

400

450

500

550

600
1 2 5 10 15 20 30 40 50 60 70 80 85 90 95 98 99
Probability, % less than

Fig. 9 – Distribution of coal reservoir depths calibrated to statistical functions.

8
Symbols - well data
7
Lines - distribution
function fit
6
Coal thickness, m

0
1 2 5 10 15 20 30 40 50 60 70 80 85 90 95 98 99
Probability, % less than

Fig. 10 – Distribution of coal reservoir thicknesses calibrated to statistical functions.

12 SPE 96899

200
Avg well rate from field data
180
Avg well rate from MCRS model
Gas production rate, Mscfd

160

140

120

100

80

60

40

20

0
0 30 60 90 120 150 180 210 240 270 300 330 360 390 420
Time, days
Fig. 11 – History match of well performance data using a Monte Carlo reservoir simulation model.

6
Original sorbed gas in place, Bscf/sec

5 Deterministic estimate from well data

MCRS estimate
4

0
1 2 5 10 15 20 30 40 50 60 70 80 85 90 95 98 99
Probability, % less than

Fig. 12 – Calibrating original gas in place with Monte Carlo reservoir simulation.
SPE 96899 13

180

640 ac/well
160
320 ac/well
160 ac/well
140
80 ac/well
Avg daily gas (Mscfd)

40 ac/well
120

100

80

60

40

20

0
0 5 10 15 20 25 30 35 40
Year
Fig. 13 – Average well production forecast from Monte Carlo reservoir simulation model for various well spacings.

2.5

40-year EUR per well

2.0 40-year EUR per section

Recovery factor
Recovery indicator

1.5

1.0

0.5

0.0
640 320 160 80 40
Drainage area per well, ac
Fig. 14 – Example estimated ultimate recovery (EUR) by well and by 640-ac section for a Horseshoe Canyon
development project.