Resource Endowment


The AER and its predecessors have been independently reporting on Alberta’s reserves and resources of energy hydrocarbons since 1961. Independent reserves and resource reporting serves many purposes, described in the energy statutes of Alberta, and supports many regulatory activities, specifically orderly subsurface development, reserves administration, and resource conservation. The methods the AER has employed since 1961 were developed for conventional oil and gas pools drained by vertical wells. Technical complexity entered the AER’s reserves and resource reporting systems starting in the 2000s because of three technological advances in Alberta: commingled production, which became common across vertically stacked gas pools in Alberta’s deep basin; horizontal steam-assisted gravity drainage, which became common in Alberta’s oil sands; and coalbed methane production, which became technically feasible in parts of Alberta. Thus, when horizontal multistage hydraulically fractured wells began production in Alberta around 2010, modernization of AER’s reserves and reporting system was already in progress. This modernization trend continues to be driven by technology changes in energy production in Alberta, moving away from vertical wells in relatively simple pools and into more complex resources accessed with different technologies.

Now, to fulfil the AER’s mission to regulate all parts of the energy-development life cycle, established by new legislation in 2013, we need to expand our understanding and reporting of Alberta’s energy endowment beyond established reserves in individual conventional pools. We need to include all components of Alberta’s resource endowment—both known and yet to be discovered—and describe the interplay between Alberta’s geology and its water, land, and environment during energy development, from exploration to closure.

Geological Framework

Understanding Alberta’s resource endowment and the AER’s evolving reporting system begins with appreciating the general geological framework of Alberta. Alberta sits atop a broad sedimentary basin called the Western Canada Sedimentary Basin (WCSB) (Figure 2.1 [Tableau]). The floor of this basin is crystalline metamorphic and igneous rocks, which are exposed in Alberta’s northeast as the Canadian Shield. This sedimentary basin is further subdivided into sub-basins by elongate basement rises called arches. Most of Alberta’s sedimentary rocks are found in the Alberta Basin part of the WCSB. The Alberta Basin is separated from the Horn River and McKenzie Basins to the northwest by the Tathlina Arch and from the Williston Basin to the southeast by the Bow Island and Sweetgrass Arches.

The layered sedimentary rocks that infill the Alberta Basin and lie atop the crystalline basin host the source beds and reservoirs of Alberta’s petroleum resources, as well as its coal deposits. Above the layered sedimentary rocks are unconsolidated sediments from the geologically recent Neogene and Quaternary ages. The crystalline basement and glacial sediments have no petroleum or coal, but they are important to the AER in ensuring that Alberta’s energy development is orderly, safe, and environmentally responsible. All of these rock units and the geological timescale are found in the Alberta Geological Survey Table of Formations.

Figure 2.2 [Tableau] illustrates the general geological evolution of the Alberta Basin. The crystalline rock below the sedimentary layers was assembled by the amalgamation of granite-cored microcontinents, volcanic islands, and sedimentary troughs during the late Archean to early Proterozoic eons, around 2.5 to 2 billion years ago. Geologists believe that, following this amalgamation, the continents of the earth drifted across its surface, much as they do today, through the process of plate tectonics, which is driven by convection in the earth’s mantle layer. Oceanic crust is born at midocean ridges where mantle convection cells drive heat and molten rock toward the surface; oceanic crust is destroyed in subduction zones or ocean trenches, where cold oceanic crust sinks below lighter continental crust and the oceanic crust rejoins the mantle convection cells to be recycled. Geologists generally agree that during the Proterozoic eon (2.5 billion to 541 million years ago), continental drift caused the earth’s continents to arrange themselves in a single supercontinent at least twice. The older of these two Proterozoic assemblages is called Columbia by geologists and the younger is called Rodinia. When Rodinia broke apart, Alberta became part of the western side of the ancestral North American continental plate or craton called Laurentia. Alberta’s geological setting became what is termed a passive continental margin or platform (Phase I on Figure 2.2 [Tableau]).

Sediment during this phase was sourced mainly from the east and deposited on the platform when sea levels rose and the platform flooded. During times of relatively high sediment supply, the platform was covered by sediments that became sandstone and shale beds. Other times, when sediment supply was low and access to the sea intermittent, great salt beds were deposited. Yet other times, when sediment supply was low and seas were warm, great carbonate banks and reefs formed across or atop the Alberta platform. These intervals of deposition were punctuated by times of sea-level decline and subaerial exposure, which created erosional surfaces and time breaks in the rock record called unconformities. Though the platform margin was passive, tectonic activity related to alternating crustal compressional and tensional forces continued along the western margin of North America. These forces contributed to subregional normal and reverse faulting and differential subsidence on the platform itself during Phase I, which affected local geology but did not change the general nature of Phase I deposition. The platform phase of the Alberta Basin lasted from the late Proterozoic time, through the Paleozoic Era, and into the Mesozoic Era.

Around 170 million years ago, during the Jurassic Period of the Mesozoic era, Alberta’s geology underwent a drastic change. By this time, the continents had formed another supercontinent called Pangea and eventually the forces of plate tectonics started to break it up. The result was the formation of the north Atlantic Ocean on the east side of the North American plate. Its spreading caused the western side of North America to override the ocean crust of the Pacific Ocean, forcing the ocean crust to be subducted beneath it. Ancient microcontinents and volcanic islands lying for many millions of years in the ocean west of North America were welded onto the platform where Alberta sits, creating volcanoes and granite intrusions along their suture zones, thus creating the geology of present-day British Columbia. The platform in Alberta became subject to intense compression, causing the rocks of the platform to buckle, fold, and ultimately break in giant thrust sheets that we know as the Canadian Rocky Mountains. The folding and thrusting bent and depressed the rocks east of the young mountains, creating a trough known as a foreland basin paralleling the mountain belts. The ocean periodically invaded the trough from the north and south, creating giant inland seas until sediments eroded from the mountains to the west and the continent to the east filled in the foreland basin. This is shown diagrammatically as Phase II in Figure 2.2 [Tableau].

Mountain building ceased in Alberta about 55 million years ago and the Alberta Basin began a long period of erosion. The Canadian Rocky Mountains decreased in elevation and great valley systems were carved on the plains to their east as great rivers carried away eroded sediments to oceans to the north and east. Meanwhile, plate tectonics elsewhere on the Earth led to the uplift of the Tibetan Plateau and the Colorado Plateau, the positioning of Antarctica at the South Pole, and the linkages of the North and South American continents. These changes altered global conditions in such a way as to cause a slow global cooling. This culminated in the glacial age that started about 2.6 million years ago and in which we live today. Glacial advance and retreat during glacial episodes carved the mountains into their jagged forms we see today and blanketed the landscape with thick glacial deposits, completely filling in the bedrock valleys of the preglacial age and creating Alberta’s modern geography.

For more information on Alberta’s geology, visit the AER’s Alberta Geological Survey (AGS) website.

Generation of Alberta’s Petroleum and Coal

Petroleum and coal are formed when rocks rich in organic material derived from plankton, algae, or vegetation are buried deeply enough, at temperatures hot enough, and for times long enough that the organic material “matures” into either petroleum or coal, depending on the original organic material type and richness. Key to this process is generation and preservation of organic-rich sediments in the first place. Alberta’s geological history created the conditions needed for major petroleum-generating rocks to form at least eight different times and coal at least five times.

Petroleum source rocks are formed when biological activity that creates the precursors of petroleum is high and the conditions for their preservation and burial are ideal. Ideal preservation conditions are typified by very low oxygen content in deep water with high sediment supply, which prevents organic material from being oxidized or eaten by other animals or bacteria before burial. These conditions occurred during Alberta’s platform stage at least five times, creating the petroleum source rocks in the Keg River Formation, the Duvernay Formation, the Cynthia Formation, the Exshaw Formation, and the Doig Formation (see Table of Formations). During the foreland basin stage, these conditions occurred again at least three more times, creating the source rocks in the Gordondale Formation, the Mannville Group, and the Fish Scales Formation of the Colorado Group.

Coal is produced where the rock is greater than 50 per cent organic matter and that organic matter is dominantly from terrestrial vegetation along shorelines or rivers and became rapidly buried before it could decay at surface. Geological conditions suitable for generating thick coal deposits in Alberta occurred at least five times, all during the foreland basin stage. Coals were formed during and after the deposition of the Fernie Group, the Mannville Group, the Belly River Formation, the Horseshoe Canyon Formation, and the Scollard Formation (see Table of Formations).

In addition to these major petroleum source rocks and coal deposits, there are also several minor ones, as well as natural gas generated by bacteria from newly buried or uplifted organic-rich sediments and rocks in the present Alberta subsurface.

Petroleum Systems and Geological Plays

Noting the existence of source rocks and coal for petroleum generation is but one essential element of developing resources in a sedimentary basin. The other elements of assessing resource endowments include reservoirs, traps and seals, and geological sequencing or preservation potential. The linked geological assemblage of all source rocks plus associated reservoirs and traps are called “petroleum systems” by petroleum geologists. Alberta has eight fundamental petroleum systems, which are based on the source rocks listed above. Petroleum from several source rocks can find its way into single reservoirs, making a number of hybrid systems as well. Coalification also generates natural gas, making coal deposits another important source of natural gas, in addition to being energy sources themselves. Treating coal as a source rock brings the total number of potential petroleum sources at the geological-formation level in Alberta to at least 13. Among global sedimentary basins, this is considered to be a large number of petroleum systems and is one reason why Alberta has such a large petroleum and coal endowment from reservoirs in many different producing formations.

Petroleum exists in the subsurface as oil, natural gas, or a mixture of the two. Petroleum exists either as a fluid that occupies the pores and fractures in the rock, distinct from groundwater, or as an adsorbed or absorbed component of the organic material on or in its originating source rocks as well as on or in organic material encountered during migration. Exploration, development, and regulation of petroleum resources need to account not only for the different petroleum systems within a sedimentary basin, but also for these different modes of occurrence in rocks within each system.

The conceptual paradigm used by geologists to classify and estimate petroleum resources in the face of this natural complexity is that of the geological “play.” A geological play can be defined as a set of known or postulated accumulations (pools and deposits) of petroleum within a petroleum system that share the same geological, geographical, and temporal properties, such as source rock, migration pathways, timing, trapping mechanism, mode of occurrence, and hydrocarbon type. By classifying petroleum pool and deposits by play, powerful tools of geostatistical inference can be deployed on sample sets of limited size to estimate resource volumes, recovery potential, and chance of discovery by exploration programs. Exploration companies use these tools to develop their exploration portfolios and development programs and maximize their chances of economic success given the high uncertainties associated with subsurface developments known only through remote sensing by geophysical methods, historical observation of production performance, and limited direct sampling through wells. The play concept has informed many previous cycles of resource estimation in Alberta, including the work of the Geological Survey of Canada; estimates by the AER and its predecessors of ultimate oil, natural gas, and bitumen reserves, as published in previous ST-98 annuals; the work of the Canadian Gas Potential Committee; and the United States Geological Survey’s World Energy Assessments.

Resource and Reserves Reporting Framework

The terms “resource” and “reserve” are often used interchangeably but have different meanings in reporting frameworks. A resource is generally accepted to be all those quantities of petroleum that are estimated to exist originally in naturally occurring accumulations, including all known and estimated quantities yet to be discovered. A reserve, on the other hand, is an estimate of remaining quantities of petroleum anticipated to be recoverable from known accumulations as of a given date, given established technology.

Petroleum-resource estimates are used for many different purposes, including inventory supply forecasting, corporate and capital planning, and securities-related reporting. Oil and gas energy regulators conduct resource studies and supply/demand forecasting to appraise energy resources in a sedimentary basin and their productive capacities, accounting for the technology but not necessarily the commerciality of the day. This information is used to guide regulation and policy development over broad regions and long periods of time. Such appraisals should not be confused with annual, securities-related reserves reporting completed by corporate entities involved in resource extraction for profit. In these cases, evaluations are done for investment, securities, financing, and insurance purposes and must adhere to strict rules related to commerciality and certainty over a prescribed time interval to protect consumers and maintain confidence in markets.

The AER has previously reported the reserves of Alberta’s oil and gas accumulations using a system called the IPACE system, which came from the report of the Joint Task Force on Uniform Reserves Terminology from the Inter-Provincial Advisory Committee on Energy in 1978. This system was purpose-built for a petroleum industry exploiting discrete pools through vertical wells. The Energy Resources Conservation Board, which preceded the AER, modified the system in the 1990s to suit the challenges of bitumen reserve reporting.

After both the global petroleum and the mining industries faced challenges in reporting accurate reserves in the 1990s and 2000s, several attempts were made to modernize and standardize petroleum resource and reserves reporting. These attempts produced three main products that are helping inform transformation from the historical IPACE framework into a resource and reserves reporting framework that is more readily understood by external stakeholders in the energy industry, more inclusive of unconventional petroleum deposits not found in discrete pools, and better suited to the needs of policy makers and regulatory practitioners in the Government of Alberta and the AER. These three products are the Canadian Oil and Gas Evaluators Handbook (COGEH), the Petroleum Resource Management System (PRMS) of the Society of Petroleum Engineers, and the United Nations Framework Classification for Fossil Energy and Mineral Resources (UNFC). For the purposes of this report, the modified IPACE definitions that were discussed in ST98-2015 are still in use. In the future, the AER intends to employ COGEH as the departure point for its broader resource and reserves classification and evaluation scheme. The AER’s future resource and reserves reporting system may need to account for cumulative environmental effects and related thresholds. Similarly, it may need to offer transparent comparisons between petroleum and coal resources and other alternative energy resources available to Albertans, including geothermal, nuclear (Alberta has potential uranium resources), wind, and solar energy.