Clover shallow gas overview

Shallow gas wells in the WCSB are typically low-rate producers of dry, sweet gas almost entirely from the Upper Cretacaous period. These wells are known to exhibit steep production declines in the first year, but with over 50,000 shallow gas wells in Canada, they make a huge contribution to Canada’s total gas production.

The NEB ranks Southeastern Alberta, where shallow gas is the predominant contributor, as the second largest gas-producing region in the Western Canadian Sedimentary Basin,A after Foothills Front region.

Although shallow gas has been under significant development since the early 1970s, extensive development potential remains. As the resource becomes more densely drilled and the total number of producing wells continues to increase, management of the existing wells also becomes more complex and data intensive.

Clover Resources is committed to developing and applying innovative, technically sound engineering solutions to shallow gas. Our focus is on maximizing reserve recovery, increasing production and ensuring economic returns.

Some interesting shallow gas facts:

· Half of all gas wells in Alberta are shallow gas wells
· AOF potential from shallow gas wells have been as high as 10 mmcfd
· About 20 major operators are focused on shallow gas, and this number is shrinking due to acquisitions and mergers.

The size of the resource

Total shallow gas OGIP in SE Alberta and SW Saskatchewan was 29.5 Tcf at the end of 2001. Shallow gas reserve additions in 2002 for Alberta alone were 2.1 Tcf, raising the OGIP to 31.6 Tcf.

Less than half of the OGIP has been produced to date, and the resource has been under develnce the early 1970s.For a comparison:

Range of discovered reserve estimates in the Sable sub-basin of Canada’s Scotian BasinB	3.6 – 5.2 Tcf
Total gas production in Alberta, 2002C	4.8 Tcf
Pembina field OGIP (largest single gas field in Alberta, but almost entirely solution gas)D	13.1 Tcf
Shallow Gas OGIP in SEA & SWSE	31.6 Tcf
Range of marketable Coalbed Methane reserves in the WCSBF	135 – 261 Tcf

Sources:
A Short-term natural gas deliverability from the Western Canada Sedimentary Basin 2003 – 2005, National Energy Board, Dec. 2003.

B Canadian Energy Supply and Demand to 2025, National Energy Board, 1999
C Statistical Series 2003-98: Alberta’s Reserves 2002 and Supply/Demand Outlook 2003 – 2012
D Statistical Series 2002-98: Alberta’s Reserves 2001 and Supply/Demand Outlook 2002-2011
E Statistical Series 2002-98: Alberta’s Reserves 2001 and Supply/Demand Outlook 2002-2011
Saksatchewan Industry and Resources, Oil and Natural Gas Reserves Data Disk 2000
Statistical Series 2003-98: Alberta’s Reserves 2002 and Supply/Demand Outlook 2003 – 2012
F Natural Gas Potential in Canada, Canadian Gas Potential Committee, 1997