The Duvernay shale sits nearly four kilometres below the surface. In its broad reach across central Alberta, it underlies fully 10 other rock zones that contain commercial quantities of natural gas . And, to the best of John Williams' knowledge, not a single company has yet drilled the kind of well needed to extract its tough-to-produce wealth.
But Mr. Williams, the president of Trilogy Energy watched late Wednesday as one or more major companies - their identities as yet unknown - laid down a staggering amount of money for land whose true value remains questionable and whose primary commodity, natural gas, has traded at such low levels in recent years that much of industry has run from it.
In a land sale that set a provincial record for the average amount paid per hectare, companies poured out $451-million to buy oil and gas rights on prospective land. Fully three-quarters of it was aimed at the Duvernay, which bears much in common with the shale gas deposits in north-eastern British Columbia that have brought huge amounts of spending and drilling to that province.
Mr. Williams is keenly interested in the Duvernay, in part because his company has, for a little under two weeks, been drilling a horizontal well into the Duvernay, along with partners Celtic Exp. and Yoho Resources It is, Mr. Williams believes, the first well of its kind to assess how productive this promising new play really is.
"If it works, it proves up a huge play type," Mr. Williams said. "So it's exciting."
It will take at least until August before results are known to the companies, and it could be well beyond that before they are released.
But others aren't waiting around. Between two sales, one in December, 2009, and one Wednesday, the oil patch has spent $672-million on buying Duvernay land, according to an analysis by geoscience company Canadian Discovery Ltd. And prices are rising fast: Discovery calculated that Duvernay lands averaged $3,984 per hectare in December; on Wednesday they went for $6,184, a 55-per-cent leap.
"It's an impressive amount of money to spend on rights for what really is an exploratory play. But there's lots of reasons to have faith in it," said Neil Watson, consulting services director at Discovery, who pointed to the geological characteristics it shares with the lucrative Horn River play.
The draw: compared to more proven areas, Duvernay land remains abundant enough that major companies can make a large bet on it. It also lies in an area thick with pipelines and other infrastructure, making it potentially cheaper to develop than plays in the northern hinterland.
"If you think gas prices are going up and you can get the lion's share of the land that's going to be a major play in the next few years, you'll look pretty smart down the road," Mr. Watson said.
Bob Fitzmartyn, an analyst with FirstEnergy who has tracked the Duvernay play, said Alberta's royalty rollback earlier this year likely also propelled more interest.
What's clear, experts say, is that this level of spending comes from major companies. On the list of possible buyers, according to industry players: Talisman Energy Inc., Husky Energy Inc., Royal Dutch Shell PLC, Encana Corp., Canadian Natural Resources Ltd. and Apache Corp.
Companies do not generally confirm participation in land sales. A Talisman spokeswoman said that company is focused on plays elsewhere. Robert Spitzer, Apache Canada's vice-president of exploration, declined comment on the bidding, but cautioned that, for all of Duvernay's potential, it remains very early days.
"These shale plays take a long time to develop," he said. "It doesn't happen in a year or two."
At $4.42 (U.S.) per thousand cubic feet, the price of natural gas is currently leaving many wells in the red. Still, some believe that natural gas may now be a good place to bet on the future.
"There are some contrarians that are starting to believe there is more upside in gas than in oil," said Gregg Scott, president of Scott Land & Lease Ltd., which was involved with 72 per cent of the bids in the Wednesday land sale.
"Can oil go up 30 per cent? Maybe not. But could gas go up 30 per cent? Maybe."