Gas

Line locates indicate what utilities are located on your property. They are free of charge and will help you plan where to situate buildings, sheds, pools, fences, etc. Hitting a gas line can result in utility repair costs, property damage, serious injury and even death.

Request a locate

The following structures cannot be built or installed over top of a utility, or encroach into a utility right-of-way (UROW):

• Decks

• Hot Tubs/Pools/Ponds
• Sheds/Accessory Buildings
• Trees/Shrubs
• Garages/Buildings

Trees/Shrubs should maintain a minimum of 1 metre separation from the locate marks and cannot be located within a UROW. Tree roots spread out under the ground and can grow into and around the buried utility causing damage. If the buried utility is ever replaced, it is unlikely the tree will survive.

Do not install fire pits within two (2) meters of a gas line. It is imperative that you call for all underground facilities to be located.

In some cases, services and meters can be relocated to accommodate the placement of the structures you want to develop in your yard. The costs of the relocation will be the responsibility of the homeowner.

It is important to safely hand-expose your gas line when it is time to start doing the work and if you are working within one metre of either side of the locate marks. Gas lines can be buried from a few inches to more than a metre deep. The amount of cover over a gas line can be changed as structures are built, soil is added or removed, and grades are adjusted over time.

Gas lines have been damaged while auguring/digging in fence posts, adjusting grades, planting trees, digging in ponds and pools, removing trees and roots, driving in landscape stakes or stakes for concrete work, anchoring supports for decks and swing sets.

When hand exposing the gas line – dig carefully! Many gas lines are polyethylene plastic and can be easily damaged or severed with a shovel which will cause gas to escape under pressure.

1. Stop work
2. Shut off any machinery and all sources of ignition
3. Call the Gas Department Emergency Line at 403-529-8191
4. Do not attempt to repair the leak or stop the gas
5. Clear people away from the area

Acquisition history

Early 1883

Original gas discovery by CPR, near Alderson while drilling for water to supply the steam engines.

1899

Charles Coulter, a stone mason and builder, drilled a well in his own backyard in an attempt to utilize gas for his own home. After completion of the well, Coulter piped gas into several houses, including a local doctor. This activity led to the development of natural gas in Medicine Hat.

1900

As the commercial value of the resource began to be understood, a private company made an offer to buy the gas franchise. At a rate payers meeting, this bid was turned down and a decision was made to operate the asset as a public utility. Serving the City well, natural gas brought into the City treasury large amounts of money to spend on other public works and helped to keep the tax rate low.

September 1901

The town declared for a municipal gas system with the passage of Bylaw #48.

November 1902

Gas was “turned on” for City gas service. Initially the City Clerk had 130 applications for gas service in the original system.

1902-1907

The City is active in developing additional wells, a gathering system and expending the gas distribution system. To encourage industrial growth, several wells within the City limits were given to industries including Rolling Mills, Alberta Clay Products, Ogilvie Mills, Maple Leaf Mills and Medicine Hat Brick & Tile.

1915

The City acquires the mineral rights from the Federal Government to approximately 12 townships surrounding the City. This agreement formed the basis of the present day Medicine Hat Gas Agreement.

1946

Mineral rights transfer from Federal to Provincial jurisdiction. A formal 21 year gas lease was issued to the City, which has been renewed in 1966, 1987 and 2008.

1964

The City acquires approximately 54 sections of mineral rights north of Seven Persons and begins development drilling in the early 1970's.

March 1982

The City acquires Pembina Pipeline properties in this area for $46 Million. This purchase more than doubles the number of producing wells from 250 to 500.

May 1985

While exploring for deeper gas zones in the NE field, the City discovers Glauc “C” oil pool.

January 1986

The City acquires the oil and gas assets of the Town of Redcliff, as well as the customer and gas distribution system of the community.

February 1991

The City acquires the first Saskatchewan property from Buttes Resources and SaskOil in Horsham, Richmound and Fox Valley fields for approximately $90 Million.

January 1999

The City acquires the Bigstick property and other Saskatchewan assets from Numac Inc. for $35 Million.

January 2000

City did its first public company take-over with the acquisition of Dundee Petroleum Corporation for approximately $10 Million.

February 2002

City acquired a larger public company, Allied Oil & Gas Corp, with a purchase valued at approximately $95 Million.

November 2007

City acquired the Freefight properties from Pengrowth Corporation for $135 Million. Subsequent to this transaction, the acquisition of the Talisman owned Compression and gathering system in this field was accomplished in April, 2009.

January 2012

City acquired the Manyberries oil assets from Chinook Energy Inc. and WGOH Limited Partnership for $48.6 million.

Planning

Alberta's geological history lends itself to large deposits of oil far beneath the surface. Experts such as geologists and geophysicists review seismic maps to determine where hydrocarbon deposits, or reservoirs, might exist that will result in oil and natural gas recovery. This activity is both an art and a science that depends on professional skills, experience and hunches. Therefore, there is always some inherited risk as decisions are made to take the next step of exploratory drilling. This pays off when productive reservoirs are found.

Exploration

Before drilling occurs, information gathering takes place by geologists and geophysicists identify a location that has potential by answering the following questions:

• Does the rock have reservoir characteristics, such as porosity (spaces in the rock) and permeability (ability of substances to move through porosity links within the rock)
• Are hydrocarbons present and are they oil or gas or both?
• Is there enough hydrocarbon in the reservoir to be economic?
• Analyze information from existing wells such as logs, drill cuttings, and core samples. 
• Logs consist of data derived from various wireline tools which are run into the wellbore after drilling. While being pulled back up to the surface, the tools measure various characteristics of the rock formations and fluids. From these measurements, we can determine formation lithology (eg. sand, shale, limestone, etc), porosity, permeability, and fluid type.
• Core samples and cuttings. When a well is drilled the drill bit cuts in the rock, creating small rock chips called “cuttings”, brought to the surface by drilling fluid. The cuttings are examined to learn more about the age, chemistry, porosity, permeability, etc. of the rock formations. Core samples are also obtained during this drilling procedure. Core samples are cylindrical rock samples, which provide information on the composition and characteristics of the rock and any fluids in it. In Alberta, core samples and cuttings from existing wells are available to any oil and gas company to view. 
• Review seismic surveys. Seismic surveys use sound waves to produce images of the rock formations below the Earth's surface. These surveys can be completed in two dimensional (2D) or three dimensional (3D) formats. Generally, the more dimensions the more costly, however, the extra expense may be worth it as 3D seismic usually presents a more complete model of the subsurface. These surveys can also be purchased from other companies, but are extremely expensive. 

Once all the above data is reviewed, if there appears to be a promising prospect, the Geology team will recommend to the company where to drill an “exploration well”. This exploration well will confirm whether there is oil or gas present and to measure the volume of the resource.

Drilling

Once minerals are confirmed and surface leases obtained, the oil and gas company is ready to drill. Plans to drill are developed in concert with Land and Environment experts and follow strict environmental guidelines and regulations. 

• First the site must be prepared which may involve clearing, levelling, and building access roads. The well is then drilled to determine whether hydrocarbons are present. Drilling operations begin with drilling a large diameter hole to depths of 75m to 300m+ depending on total depth of well and formation characteristics. 
• Surface casing is then set and cemented to surface. Approximately 8 hours after surface casing is cemented, the drilling process continues to either total depth of the well or a certain point where intermediate casing is set and cemented. This process usually happens in wells that are 2000m (vertical or horizontal wells). Depending on the wellbore, once surface and some instances intermediate casing are set and cemented the remaining wellbore is then drilled to TD (Total Depth) and production casing is set in the wellbore and cemented. Prior to production casing being run in the hole and cemented, open hole logs are run from surface by an electronic wireline unit to understand formation characteristics and determine if hydrocarbons are present. If hydrocarbons are found and producible, further wells are drilled to determine the size and extent of the reservoir. 
• Drilling rigs vary in size, generally the bigger the rig, the deeper it can drill. Companies will decide on what kind of rig to use based on cost, availability, depth and the characteristics of the site and reservoir. There are also different types of drilling, with the following two being the most commonly used:
  • Directional – this allows multiple wells to be drilled from a common drilling pad, reducing the wells' disturbance on the land. A slanted or curved wellbore is used. The drill bit can change directions underground by the use of measured while drilling (MWD) instruments in the drill string and coordinated from surface by a directional engineer.
  • Horizontal – this involves a vertical well where the path can turn more than 80 degrees in a horizontal direction.

Completion

Once the drilling is complete and the company is confident in the success of the well, the well is prepared for production, through a process called completion:

• After the interpretation of the open hole logs, the formation(s) are perforated by running in the wellbore with a perforated gun either by a wireline unit or service rig. Once at the desired depth the perforating gun shoots various sizes of holes through the production casing and into the hydrocarbon zone.
• A smaller rig, classified as a service rig is moved in and setup on the wellbore to land jointed production tubing. The size of tubing is dependent on the hydrocarbon characteristics. 
• Some wellbores may only require production tubing for gas and/or oil to flow to surface, but in most cases a rod string and bottom hole pump is lowered inside the production tubing and controlled at surface by a Pumpjack.

Production and processing

Production is the process of bringing hydrocarbons to the surface where the crude oil or natural gas is prepared for processing.

• Natural Gas generally flows under its own pressure through the wellhead into the gathering system pipeline. The gas from the pipelines flow to and is processed at the compressor station, which takes the water and impurities out of the gas by means of inlet water knock out vessels or scrubbers, and is compressed through to a dehydrator to dry the gas and on to a sales line.
• Oil production is more complicated and varies depending on the weight of the oil, how easily it flows, the porosity and permeability of the rock, the pressure in the oil reservoir and the pressure of other fluids such as natural gas and water in the reservoir. 
• The City of Medicine Hat has conventional crude oil wells. These wells bring oil to the surface, using either the pressure of the reservoir itself or with the addition of pumping equipment with flow lines to onsite water separation, oil treaters to dry the oil and piping to storage tanks for future hauling by truck to sales facilities.

For both oil and gas wells, sometimes additional stimulation work might be needed to improve the flow from the wellbore:

• Cleaning the well bore – using acid mixtures (acidizing) to dissolve offending material
• Hydraulic fracturing - injecting high pressure fluids into the perforation tunnels to cause rock formation to fracture thereby opening up gas channels to allow gas or oil to flow more freely
• Artificial Lift – artificial means to increase flow of liquids or gas where downhole pressure is minimal to produce on its own further assistance of coiled tubing well bore clean outs, swabbing, velocity strings or various subsurface or surface pumping systems.

Monitoring and reporting

Monitoring of active wells takes many forms. Overall monitoring for performance and compliance is done by provincial and federal regulation. Reports and information are provided including information gathered from monitoring such things as equipment operation, flow rates, recovery rates, and environmental data. Some monitoring is done on the ground, and other monitoring is done using wireless technology or contracted to companies who specialize in the collection and analysis of data.

Transportation and marketing

• Once our oil is produced and processed, the commodity is ready to go to market. Oil is transported via truck to the most economic terminal connected to a pipeline offering the best net back for the commodity. 
• Each year The City of Medicine Hat reviews and enters into oil trucking (transportation) agreements to transport clean oil from our batteries to a pipeline connected terminal. Transportation agreements are based on price per meter cubed (m3) and accesses the closet and most economic pipeline terminal. Oil storage facilities are usually stored in large above ground tanks until the oil can be moved by pipeline.
• The supply/demand and price for oil fluctuates based on seasonal demand in Canada, the United States, worldwide and geopolitical events. Seasonal demand in Canada and the United States are driven by consumers traveling more during the summer increasing demand on gasoline and in the winter for heating oil (mostly on the Canada east coast and in the American northeast). Oil prices in Canada and US can fluctuate in the spring and fall due to refinery turnarounds and repairs. Gas is usually stored underground.
• At the pipeline the marketing group ensures the City receives the best price for the oil. Transportation costs and distance of haul are the main reason why crude oil prices vary from place to place. Tariffs (cost associated with offloading at the terminal and moving the oil through the pipeline) are another factor that forms part of the negotiated price for the City as a seller of the commodity. Prices for oil in North America are based on the “benchmark crude” (an oil with which others are compared to determine their price) of Western Texas Intermediate (WTI). 
• Another “benchmark crude” is Brent Blend but it is considered more of a world price for oil. In Canada there are two benchmark crude streams discounted (priced lower) off of WTI. The first is for a heavy crude that is a Western Canadian Select (WCS) (the discount can be between $8 and $30 lower per barrel) and the second is a lighter crude Edmonton Sweet (a discount can be between $3 and $15 lower per barrel). The oil the City sells is based off of the WCS price. 
• Once our natural gas is produced and processed the commodity is delivered to NOVA Gas Transmission Limited pipeline in Alberta and the TransGas pipeline in Saskatchewan. The demand for the commodity will fluctuate based mainly on the weather (winter & cold = increased demand for gas for heating or in a hot summer where there is extra natural gas fired electric generation to keep up with air-conditioning demand). Another influence in price is supply (North American production), the amount of gas that is in (the ground) storage in North America and the amount of pipeline capacity there is to move natural gas. 
• The City owned natural Gas is used to heat the homes of the Citizens of Medicine Hat, help run large industrial plants, etc. Excess gas that is not needed is sold on the daily market.

Suspended well

Cost recovery is important in the business of gas and oil wells. Over time, a well may begin to cost more to maintain than it makes in revenue. Eventually a well may reach an economic limit where its production rate does not cover operating expenses. This well will be slated to be plugged and until that happens, it is recorded officially as a suspended well.

Abandonment

All wells that are not producing or no longer being used must be officially abandoned, and the land must be returned to its original state. Well abandonment involves the preparation of an extensive abandonment plan and there are significant costs involved for it to be done correctly.

• The wellbore is closed, usually with cement. 
• All equipment is removed from the site. 
• The well casing is cut below the surface and the well is capped. Often the term ‘Decommissioning' is used when a well is abandoned. This also refers to the removal of facility followed by removal of equipment, buildings and other structures, and to the remediation of the surface and subsurface.
• The Alberta Energy Regulator regulates all of these activities
  AER Well Closure, Abandonment, Reclamation and Remediation Fact Sheet

Reclamation and remediation

When all of the surface equipment has been removed and the wellbore has been appropriately abandoned, it is the company's responsibility to reclaim the site. The intent of reclamation is to achieve ‘equivalent land capability'. Depending on the current use of the land, the site should be functionally equivalent to what it was prior to occurrence of the energy development activity.

• Surface reclamation may occur in several phases in which both the current state of the site and its operational history, are thoroughly examined. Should subsurface contamination have occurred during the lifecycle of the activity, these contaminants are removed or remediated to meet provincial regulatory requirements. 
• Once the subsurface requirements have been met, surface reclamation is undertaken with the end goal of ensuring the topography, soils, and vegetation on the site is consistent with the surrounding landscape. Depending on the nature of the site, this process may be relatively short or take several years. Provincial regulators have established legal criteria which must be met in order to achieve closure on the site. 
• Upon completion of surface reclamation activity a detailed site assessment is undertaken by an independent third party contracted by the company, to evaluate the site in accordance with the established criteria. Once regulators are satisfied that criteria have been met, the site is certified as having been reclaimed.
• In sensitive native prairie landscapes the more recent focus has been on landscape restoration as opposed to reclamation. To aid in achieving restoration, measures are undertaken to ensure disturbance to topography, soils and vegetation is minimized during the operational lifecycle of the energy development activity.

Environmental stewardship

Alberta is among the world's leaders in oil and gas environmental regulation. A recent study compared ten leading oil and gas producing regions from around the world, Alberta consistently landed in the top three in terms of stringency of environmental policies and laws, compliance and transparency.