BC's Natural Gas GOLD RUSH...

[Stingray2004]

As many are aware, natural gas royalties represent a considerable portion of BC's ~$13 billion in cumulative surpluses over the past 5 years and every annualized $1 increase represents an additional roughly $300 million, IIRC, in revenue to provincial coffers.

Last year natural gas was around $6 - $7 per tcf, while the benchmark price of natural gas on the New York Mercantile Exchange on Friday was $9.73 per thousand cubic feet.

As an aside, natural gas is also Alberta's major source of energy royalties from what I understand.

Additionally, last year BC earned ~$1.1 billion in revenue from these energy exploration rights.

Such future inflows to government coffers would also perhaps permit transit/highway infrastructure projects to come on line sooner rather than later.

So imagine what my thoughts were when I read this Globe and Mail article this morning:

_________________________________________________________________
Gas players gear up for B.C. rush

Huge discoveries in northeast ignite 'massive land grab' for drilling rights

DAVID EBNER

March 3, 2008

CALGARY -- The remote and rugged northern fringe of British Columbia is set for a frantic land grab by natural gas explorers, following months of speculation and intensified by last week's announcement of what could rank among the largest gas discoveries in Canadian history.

Located in northeastern B.C., with the key area centred on the Horn River Basin, very little was known about the play until last Thursday, when Houston-based EOG Resources Inc. said it might have reserves of six trillion cubic feet - the same as Mackenzie Delta, Northwest Territories, and a figure that would increase Canada's total proved reserves by roughly 10 per cent.

EnCana Corp. of Calgary - which claims the initial discovery of Horn River's potential - and partner Apache Corp. of Houston may also have 6 trillion cubic feet of gas, Apache said in early February.

EnCana, Apache, EOG, as well as Nexen Inc. of Calgary, are the four major firms on the play and hold exploration rights for more than 600,000 acres. In late March and again in late April, the B.C. government announces the results of the next two auctions of exploration rights in the province, with roughly another 200,000 acres up for grabs in the Horn River region.

"Everyone's looking at bidding at land up there, it goes without saying," said Dale Shwed, chief executive officer of Crew Energy Inc., a Calgary junior explorer that has a small position in the region.

Industry's focus on Horn River has increased steadily in the past year, most recently capped by the $67-million put down at B.C.'s February auction of exploration rights for land in the area. "I suspect the EOG announcement will push it through the roof," said Michael Harris, vice-president of investor relations at Nexen.

Major advances in technology are helping drive the frenzy, including horizontal drilling and subsurface fracturing of the complex and difficult shale rock in which the natural gas in Horn River is trapped. Unlike conventional pools, economically extracting gas from shale rock has been, until just recently, next to impossible.

"This is setting up to be a massive land grab equivalent to that of the oil sands binge in Alberta during late 2005 and early 2006," analyst Robert Fitzmartyn of FirstEnergy Capital said in a report last Friday. "Land sales are likely to remain frantic over the coming months."
_________________________________________________________________


http://www.theglobeandmail.com/servlet/story/LAC.20080303.RBCGAS03/TPStory/TPBusiness/BritishColumbia/

[SpongeG]

yah i grew up in the NE

most people down here have no idea what goes on up there

there are billions and billions being invested up there

but Alberta gets all the headlines

[Stingray2004]

Natural Gas Bonanza For B.C.

Scott Simpson, Vancouver Sun

Published: Friday, March 28, 2008

The rush for natural gas in northern British Columbia reached a fever pitch in the 2007-2008 fiscal year that closes on Monday, Energy Minister Richard Neufeld announced.

B.C. took in $152 million in bonus bids in March to lift gas and oil rights sale revenue to more than $1.2 billion - almost twice the previous record for single year sales, Neufeld said in a news release this week.

"These exceptional land rights sales show British Columbia is a top jurisdiction for oil and gas investment," said Neufeld in the release. "Our success is the result of first-rate resource potential and strong support for continued industry growth. We have increased our natural gas reserves, expanded infrastructure and attracted new interest to B.C. that will benefit the entire province for decades to come."

The previous record, set in 2003-2004, was $625.7 million.

This year¹s amount also saw a near-doubling in the per-hectare value of bids - $1,863 per hectare compared to $984 in 2006-2007.

Eighty-one parcels covering 89,752 hectares were offered in the March 26, 2008 sale, and bids were accepted on 81 parcels for an average price of $1,694 per hectare, the government said.

Key parcels in the March sale were three drilling licenses located in the Horn River Basin area about 45 kilometres north of Fort Nelson, with bid totals of $22.9 million, $15.8 million and $12.4 million for the trio.

Horn River Basin has immense potential for shale gas development, although the technology to tap gas in deposits of this type is still in development - gas prices must be relatively high in order for them to remain economic.

Natural gas resources in B.C. are increasingly in demand among Canadian drillers, especially in light of the decline in conventional gas resources in Alberta.

British Columbia, by contrast, is relatively unexplored and is believed to contain vast gas reserves - although many of the deposits are in areas such as Horn River which present greater technical challenges for drillers, who may have to pay up to 10 times as much per well compared to conventional gas plays in Alberta.

http://www.canada.com/vancouversun/news/story.html?id=b3a6c656-b66c-4a79-90fb-f86bdb020468&k=69171

With BC's treasury receiving $1.2 billion from gas and oil land sales for the past fiscal year, I was certainly surprised to see that the figure surpassed Alberta's $710 million figure.

Last year, Alberta's natural gas and oil land sales plummeted 52 per cent to $710 million, down from 2006's record $1.5 billion. And so far, this year's sales are half of last year's dismal rate.

http://www.canada.com/edmontonjournal/news/ideas/story.html?id=2d84aaf7-66ed-4dfe-8abf-ab1629ff9803&p=2

[muzhav84]

this big news, even the Wall Street Journal ran an article today about it.
British Columbia Is Becoming A Major Player in Natural Gas
By Ben Casselman
Word Count: 531 | Companies Featured in This Article: Devon Energy, Apache, EnCana
British Columbia, long an also-ran in Canada's energy boom, is emerging as one of North America's hottest areas for natural-gas exploration.

One factor: An accommodating government in a time when other countries and regions are angling for a bigger slice of energy-production profits.

Thursday, British Columbia said it reaped 152 million Canadian dollars (US$149.2 million) on the sale of drilling rights on 81 parcels of land covering more than 220,000 acres. It was the latest in a series of major sales, which already had brought in more than C$1 billion in the fiscal year ending Monday, outpacing the previous annual ...

http://online.wsj.com/article/SB120667752169371193.html?mod=googlenews_wsj


And here is a excerpt from National Post.

Alberta's energy crown threatened
B.C. and Saskatchewan raking in huge sums from the sale of crude and natural gas exploration rights
DAVID EBNER

March 28, 2008

CALGARY -- British Columbia and Saskatchewan are on the verge of a huge oil and natural gas exploration boom as companies pour hundreds of millions of dollars into land rights, shifting their focus away from the established energy capital of Alberta

http://www.theglobeandmail.com/servlet/story/LAC.20080328.RGAS28/TPStory/Business

[Nutterbug]

Does this mean America will "liberate" us one day?

[zivan56]

Great. Now if our government has the balls that the Newfoundland one does, we could actually benefit from this (or get screwed over like Alberta if it doesn't).

[agent_imperial]

Great. Now if our government has the balls that the Newfoundland one does, we could actually benefit from this (or get screwed over like Alberta if it doesn't).

I think you guys are seeing the benefits already. Our government screwed us out of millions by raising the rates. I believe that the drop in revenue from land sales and the decrease in taxes collected from companies and less employment will outnumber any incremental revenue we receive from royalties.

[zivan56]

^^ Considering today's energy prices and the billions that such companies make in terms of profit...we can get the huge royalties and the large number of jobs at the same time. Newfoundland will be a "have" province within less than 2 years, all due to that recent deal they struck up.

[Stingray2004]

Another Day.... Another Big Pay Day:

B.C. oil and gas land rights sales heating up

Nathan VanderKlippe, Financial Post

Published: Thursday, May 22, 2008

VANCOUVER -- British Columbia posted the latest in a series of record-smashing oil and gas land rights sales on Thursday after industry paid a whopping $441-million for ground in two of the country's hottest natural gas plays, the Montney and Horn River.

Fuelled by a potent mixture of diminishing reserves and rising commodity prices, the companies – who use land-buyers to cloak their identities – more than tripled the average price paid for land just six months ago to $10,990 per hectare.

The highest prices went to land in the Montney, a tight-sand – or unconventional – play that could contain as much as 100 trillion cubic feet of recoverable gas according to some researchers.

One parcel of land about 40 kilometres southwest of Fort St. John fetched a stunning $25,383 per hectare, nearing the Canadian record for such a sale.

"Those were kind of take-your-breath-away kind of numbers," said John Crum, president of Apache Canada, which picked up three parcels of land in the Horn River basin, a more remote shale-gas play near the Northwest Territories border that also attracted significant attention in the auction.

Mr. Crum admitted to bidding – and losing – on land in the Montney.

"We got blown out of the water," he said. "When we bid, I told my guys I didn't think their recommended bid was going to win. But I thought [the winner] would be about twice what we bid. This was more like five times. These are big numbers."

In fact, their sheer size substantially winnows the list of companies likely to have picked up ground, said Andrew Boland, the head of research at Calgary investment dealer Peters & Co. Ltd.

EnCana Corp., Murphy Oil Corp. and ARC Energy Trust are all players in the area, as are Talisman Energy Inc. and Duvernay Oil Corp., both of which have been the focus of speculation that they would have been big bidders at that land sale. "But given the amount that went out the door who knows who it was," Mr. Boland said.

Other possibilities include BP and Shell Canada, he said.

Frank Terner, Shell Canada's land coordinator, said, "it would be awkward for me to answer" a question about his company's involvement.

"I know there are a number of industry players active in the area," he said. "There are sweet spots that industry pursues from time to time. ... It's a very high price that's being paid, but obviously someone sees value in the property that they're pursuing."

Mr. Boland estimates the Montney can economically produce gas with prices at $6-$7 per thousand cubic feet, or just over half current prices. It could potentially flow as much as 4 or 5-billion cubic feet of gas per day, more than 20 times its current rate, he said.

Perhaps equally exciting for B.C. is the prospect of even more record-breaking land sales.

"There's a lot of land in B.C. that still could be posted. So are there going to be more land sales like this to come? My guess is there will be," said Gregg Scott, the president of Scott Land and Lease, the top Crown land buyer in western Canada for almost two decades.

"Anything's possible when you get momentum and success."

Financial Post

[Stingray2004]

Crown Oil and Gas Land Rights...

For Calendar Year 2008 to Date:

BC: $751 million

Alberta: $352 milllion

That's extraordinary!

[subdude]

Sask is no slouch either:

Crown land sales in 2008: $462 million so far

http://www.er.gov.sk.ca/adx/aspx/adxGetMedia.aspx?DocID=3698,3402,3384,5460,2936,Documents&MediaID=19451&Filename=LANDSALE+GRAPH.pdf

[raggedy13]

^Do you mean 2007 or 2008?

[subdude]

Oops, 2008 sorry.

[SpongeG]

good news - FSJ i hear is booming - but its a real crap hole to live in

[hollywoodnorth]

Go GORDO Go! ;)

[northwest2k]

But are we just whoring out our land to foreign investors? Or are BC companies doing any of the exploration/extraction??

[Stingray2004]

A couple of interesting tidbits today...

A junior oil/gas firm was the target of a large takeover bid by Shell today and the $5.9 billion pricetag as well as the reasons behind purchase (magnitude of the northeast BC Montney tight natural gas play) are interesting:

Duvernay Oil investors reap gusher as Shell proposes $5.9-billion takeover

Seven-year-old Duvernay has significant land holdings in the Montney natural gas play in northeastern B.C. - a region that has drawn a great deal of attention from major Canadian and international energy companies.

Shell Canada spokesman Jeff Mann said the Duvernay takeover will help the company grow its interests in tight gas - natural gas trapped inside hard rock formations that is pricey and difficult to exploit.

"Our interest in Duvernay relates to their tight gas assets and our ability to bring our operating experience in tight gas and our financial abilities to bear on those assets," he said.

http://canadianpress.google.com/article/ALeqM5ggYMFCLva1klhLMED89Uxu0xyQIg

On top of that, an interesting article about offshore oil and gas. I know, I know... but BC produced light crude would be more environmentally friendly than oil from the dirty tar sands.

A Royal Society of Canada report estimated there could be 1.3 billion barrels of oil in the Queen Charlotte Basin and 9.8 trillion cubic feet of gas, worth a total of $110 billion.

Total offshore oil reserves have been estimated in the range of 10 billion to 19.4 billion barrels, and natural gas reserves are estimated at between 43.3 trillion and 489 trillion cubic feet.

Imagine where we would be if the province had convinced the feds to lift the moratorium on offshore development and started exploration five years ago.

And given the price of oil today (hovering at $144 per barrel), we would have attracted the huge investments necessary to extract black gold in an environmentally safe manner in a few years.

These revenues could have paid for a lot things British Columbians want: Kindergarten for children; reduced waitlists for our parents and grandparents seeking medical care; enough homes to shelter the homeless roaming our streets; seismic upgrading of schools to keep our children safe; and better transit that could help take more cars off our streets, to mention a few.

Alas, none of these good things will come to pass because Premier Campbell turned into Kermit the Frog and didn't expend the political capital necessary for us to take advantage of this huge resource potential.

The Liberals were and are clearly fearful of losing the green vote.

http://www.canada.com/vancouversun/news/story.html?id=d4f3604d-d9bd-4349-815b-aaf36dbf5347&k=18623

[SpongeG]

But are we just whoring out our land to foreign investors? Or are BC companies doing any of the exploration/extraction??

oil is all basically foreign - and mostly all british

petro canada is one of the only tru canadian ones

but the industry hires a lot of local small companies to do the work so local businesses do benefit and all that

[northwest2k]

oil is all basically foreign - and mostly all british

petro canada is one of the only tru canadian ones

but the industry hires a lot of local small companies to do the work so local businesses do benefit and all that

IC

What about in Russia? Is it the same sort of deal? Or do they have more domestic companies doing the work? IE Gazprom

[lubicon]

oil is all basically foreign - and mostly all british

petro canada is one of the only tru canadian ones

but the industry hires a lot of local small companies to do the work so local businesses do benefit and all that

The only British company I can think of is (was) BP, but they have merged with Amoco (U.S.).

There are plenty of Canadian companies involved in exploration in BC, some large, some small, and some in between. Some of the big ones are:

Encana
Talisman
Suncor
CNRL
Nexen

[Tom Bombadil]

The only British company I can think of is (was) BP, but they have merged with Amoco (U.S.).

Shell is British as well, and they have a large presence in Canada.

[LeftCoaster]

^ No shell is dutch. Hence its full name 'Royal Dutch Shell'

Canada actually has quite a few home grown and Canadian owned petro companies, although they are all relatively small players.

[Stingray2004]

A $610 million payday

UNPRECEDENTED LAND RIGHTS SALE SHATTERS RECORDS

July 17, 2008

Key records broken by July 2008 land rights sale and other highlights:


New Record/Highlight [Old Record]

Fiscal year total
(to July 2008 and counting): $1.3 billion [$1.2 billion in 2007/08]

Calendar year total
(to July 2008 and counting): $1.58 billion [$1.04 billion set in 2007]

Highest monthly land rights sale:
$610 million [$441 million set in May 2008]

Highest average price for an individual parcel:
$33,649/hectare (drilling licence) [$25,384/hectare
(set in May 2008)]

Highest average price for a lease parcel:
$24,690/hectare [$22,305/hectare
(from August 1980)]

http://www2.news.gov.bc.ca/news_releases_2005-2009/2008EMPR0048-001110-Attachment1.htm

Calendar year to date figures:

BC: $1.58 billion :cheers:
AB: $640 million
SK: $605 million

[northwest2k]

A $610 million payday



http://www2.news.gov.bc.ca/news_releases_2005-2009/2008EMPR0048-001110-Attachment1.htm

Calendar year to date figures:

BC: $1.58 billion :cheers:
AB: $640 million
SK: $605 million

:notacrook: Money moneeeeeeeeeeeey

[Stingray2004]

Somehow... it's all about the WOW factor!


B.C. announced Thursday a $502-million take, its second-biggest auction of exploration rights ever, behind last month's record $610-million.

This year's total, after just eight months, is $2.08-billion, swelling provincial coffers and already double last year's record.

For natural gas, B.C. is where every big and small energy company wants to be. EnCana Corp., which was active in the most recent auction, said it could produce two billion cubic feet a day of gas from Montney and Horn River, the two hot B.C. plays.

That would be an amount equal to two-thirds of B.C.'s current output and one-eighth of Canada's total, which now comes mostly from Alberta.


Calendar year to date figures for crown land grant sales:

BC: $2.08 billion
SK: $848 million
AB: $716 million


http://www.theglobeandmail.com/servlet/story/RTGAM.20080814.wauction0814/BNStory/energy/home

[Hourglass]

Sounds like a lot, but there are a lot of hungry mouths to feed... :haha:

BC should be salting some of these windfall revenues away in a rainy-day fund like they are doing in Norway. The good times won't last forever...

[lubicon]

Kitimat LNG reverses its plan
Article Comments (1) The Canadian Press

September 19, 2008 at 1:44 PM EDT

CALGARY — Private Calgary-based company Kitimat LNG plans to export liquefied natural gas to Asia from its proposed terminal on the British Columbia coast — reversing its previous intention to import LNG through the same site.

“Fundamental changes” in the global natural gas market have made it more viable to export liquefied natural gas than to import it at the planned Bish Cove terminal near Kitimat, B.C., the company stated Friday.

“The growing economies of the Pacific Rim and rapidly increasing demand for LNG make Asia a natural market for B.C.'s plentiful and expanding supplies of natural gas,” said Rosemary Boulton, president of Kitimat LNG.

She said there is already an extensive pipeline network that connects B.C. gas suppliers to the Kitimat area.

Many big energy names are developing unconventional gas plays in northeast B.C.'s Horn River Basin and Montney formations.

“Delays and cancellations of several LNG liquefaction terminals have caused major LNG shorfalls globally. Regasification terminals in North America are underutilized,” said Ilene Schmaltz, Kitimat LNG's vice-president of supply and marketing.

Earlier this year, Petro-Canada and TransCanada Corp. put a proposed regasification terminal in Gros Cacouna, Que. on hold after Russia's Gazprom, from which the companies had hoped to get their supply, cancelled a plant in the Baltic Sea.

LNG is natural gas that has been cooled to about -160 degrees C, condensing it into liquid form that is easier to transport by sea.

[Tom Bombadil]

^ No shell is dutch. Hence its full name 'Royal Dutch Shell'

Canada actually has quite a few home grown and Canadian owned petro companies, although they are all relatively small players.

I missed this response earlier. Royal Dutch Shell is British and Dutch in origins (Royal Dutch= Dutch; Shell= British). There official headquarters however are in London. Thanks for the quick dismissal.

[LeftCoaster]

Actaully its offical head quarters are in The Hague, Netherlands, but the company is regestered out of London.

The terms of the merger actually split ownership 60/40 to the dutch side, so I would still contend that it is technically a dutch company, albiet with major british ties.

[Tom Bombadil]

Actaully its offical head quarters are in The Hague, Netherlands, but the company is registered out of London.

I stand corrected. Let's say that it is Anglo-Dutch or Dutch-Anglo if you prefer.

[LeftCoaster]

aww... but i wanted a meaningless semantic argument.

Oh well you have come out the bigger person.

And I hate to admit it but Anglo-Dutch has a much better ring to it.

[djmk]

but isn't Beatrix one of the largest shareholders in shell? (or is that a rumour?)

if she is, put my vote for Dutch-Anglo.

ik ga akkoord, is de linkerkust de beste kust

[Locked In]

B.C. reaps record $2.4 billion from gas and oil auctions

By Scott Simpson, Vancouver Sun - March 26, 2009 1:59 PM

http://a123.g.akamai.net/f/123/12465/1d/www.vancouversun.com/business/reaps+record+billion+from+auctions/1431273/1431274.bin
The $2.4-billion in natural gas and oil land rights sales in the 2008-09 fiscal year total trumped the previous record-breaking year by $1.2 billion, and broke every tracked record for oil and gas land rights sales in B.C.
Photograph by: Handout photo, Vancouver Sun files


British Columbia hauled in a record $2.4 billion from natural gas and oil land rights sales in the 2008-2009 fiscal year, Energy, Mines and Petroleum Resources Minister Blair Lekstrom announced Thursday in a news release.

Revenue from bidders looking to lock in rights to explore for natural gas and oil was "more than double" the record set in the previous fiscal year.

“The records shattered by the 2008-09 oil and gas land rights sales underscore the unprecedented growth of the B.C. energy sector,” Lekstrom said in the release.

“Investors recognize the oil and gas resource potential in B.C. evidenced by records like an incredible $33,649 per-hectare bid for a drilling licence."

The news release said the $2.4-billion 2008-09 fiscal year total trumped the previous record-breaking year by $1.2 billion, and broke every tracked record for oil and gas land rights sales in B.C. This is in addition to the record-setting 2008 calendar year total of $2.66 billion, the release added.

ssimpson@vancouversun.com
© Copyright (c) The Vancouver Sun


Source: Vancouver Sun (http://www.vancouversun.com/reaps+record+billion+from+auctions/1431273/story.html)

[Stingray2004]

Some amazing results announced from BC's northeast Horn River natural gas basin in the past few weeks. Could be phenemenal over the coming years, esp. to the provincial treasury in terms of royalties... and we're talking in the $billions$. NG prices also will need a bit of a boost in the coming years.

Encana has been involved with Horn River big time over the past few years as well.

And now Exxon Mobil has bypassed the Texas Barnett shale play and Louisiana's Haynesville shale play for our own Horn River shale play.

Very big news. :yes:

Exxon Results Hint At B.C. Gas Bonanza


Vancouver — Globe and Mail Update
Last updated on Wednesday, Jul. 15, 2009 04:33AM EDT


The first results from Exxon Mobil Corp.'s (XOM-N68.460.020.03%) exploration of the large Horn River natural gas field in British Columbia suggest there could be even more gas in the area than previously predicted.

Exxon, the world's largest publicly traded energy company, arrived late to Horn River, staking a claim in the untested southern area of the region last year. Last month, the company and its majority-owned Canadian arm, Imperial Oil Ltd., (IMO-T42.850.400.94%) spent more than $100-million to buy the rights for more land adjacent to its original holdings.

On Thursday, Exxon said tests of its first couple of wells drilled last winter flowed at about two million cubic feet a day. Company spokesman Patrick McGinn wouldn't characterize the result or say whether Exxon was happy with it.

“It was just a first look to see what might be below ground,” Mr. McGinn said.

Though the conservative Irving, Tex.-based company is mostly mum, the news is yet another positive sign for Horn River, which is believed to be the largest gas discovery in Canadian history.

Located north of the town of Fort Nelson in rugged and remote northeastern B.C., Horn River is a shale gas play, a type of gas reservoir that has been unlocked with new drilling technology. The most prolific such field is the Barnett in Texas.

In the past two years, a rush of gas from other shale gas fields has produced an unexpected surge in supply, which suggests North America has far more gas than the industry had thought.

For Horn River, years of work and billions of dollars will be required to develop the field, if it lives up to early promise.

Roads, pipelines and processing facilities all need to be built.

Also, the region is far from customers, so competition with other fields in Texas and Louisiana is intense.

Still, EnCana Corp., (ECA-T55.811.362.50%) which discovered Horn River in 2003, has already said it could eventually exceed what the Barnett currently produces.

“We're at the early stages in Horn River,” EnCana spokesman Alan Boras said. “It has tremendous potential. There's a lot of gas.”

Exxon, especially, is expected to move slowly. The company's focus is profit and return on capital, not growth, said analyst William Lacey of FirstEnergy Capital Corp.

“It's another endorsement for the region,” Mr. Lacey said. “But Exxon is pretty conservative. I don't think they're going to rush out to develop.”

The Exxon test wells were drilled vertically in to the earth and the well bore was punctured by a single perforation, a general test to see how much gas might flow from below ground.

Production wells at Horn River are initially drilled vertically and then kick horizontally. Along the horizontal leg, which usually extends more than a kilometre, the well bore is punctured eight or more times and the tight rock is fractured by pumping a high-pressure mix of water and sand into the gas field to get the commodity to flow.

Shale gas could mean the brutal swings in the price of natural gas, from manic highs to deep lows, might moderate in the next decade as ample supply is balanced against demand, with producers more able to turn taps on and off rather than just pushing new production to market regardless of the need for the commodity.

While early production results from shale are strong, there is a debate whether the resource can actually increase long-term North American supply. Instead, it might simply mitigate declines from aging conventional gas fields, whose output falls more than 20 per cent each year.

Current production from Horn River is small at about 100 million cubic feet of gas a day. That's roughly 2.5 per cent of what Barnett produces today and less than 1 per cent of total Canadian production.

Significant production from Horn River likely won't emerge until 2012 or 2013.

http://www.theglobeandmail.com/globe-investor/exxon-results-hint-at-bc-gas-bonanza/article1212914/

From the Wall Street Journal:

Exxon Shale-Gas Find Looks Big

Exploration Push in British Columbia's Horn River Basin Produces Encouraging Results

By RUSSELL GOLD
HOUSTON -- Exxon Mobil Corp. has been scouring the globe for natural gas locked inside shale formations, and said it thinks it may have a world-class find in Canada.

In an interview with The Wall Street Journal, Tim Cejka, Exxon's head of global exploration, said the company has been bullish on shale-gas exploration since 2003, locating promising gas-bearing rock formations and snapping up leases on them.

Exxon is most encouraged by the exploration of 250,000 acres it has leased in the Horn River Basin, in northern British Columbia. Mr. Cejka said results from the first four wells lead the company to conclude that each well will produce between 16 million and 18 million cubic feet of gas a day.

That's five times the size of average wells in Texas's Barnett shale and comparable to big wells in Louisiana's Haynesville shale, two major shale-gas fields that already have moved the U.S. natural-gas market from scarcity to abundance.

Though Exxon is better known as the nation's largest oil company, "We are really interested in shale gas," Mr. Cejka said, detailing the company's push into the energy-exploration business, which was once dominated by scrappy independent companies.

http://online.wsj.com/article/SB124716768350519225.html

Analyst: Horn River bonanza could make Alberta natural gas drilling "obsolete"

By Lauren Krugel (CP) – 6 days ago

CALGARY — Alberta's "bread and butter" conventional natural gas industry faces a serious threat from a potentially huge resource looming in neighbouring British Columbia, an analyst says.

The Horn River Basin "has the potential to render those plays obsolete," said Michael Mazar with BMO Capital Markets.

"It might be really bad for Alberta."

An executive with Texas-based energy giant ExxonMobil Corp. (NYSE:XOM) told the Wall Street Journal Thursday that early drilling in Northeastern B.C.'s Horn River Basin suggests wells could produce between 16 million and 18 million cubic feet of gas a day.

ExxonMobil and its Canadian subsidiary, Imperial Oil Ltd. (TSX:IMO), were buyers in the June land rights sale, which netted the B.C. government $178 million - triple total sales for the past five months and the ninth-largest monthly tally in history.

Shallow natural gas drilling in Alberta's heartland has break-even economics with gas prices in the $7.50 per 1,000 cubic feet range, Mazar said.

With the price languishing around $4 for the past several months, drilling rigs throughout the province were idle this past winter season, traditionally the busiest time of year. On Friday, the price of natural gas was close to $3.

Horn River gas is economically viable with natural gas in the $5.50 range, Mazar said. Stripped of up-front costs, like infrastructure, that price could be $4.

"You wonder what the future of those (Alberta plays) are if these other (B.C.) plays are that prolific at much lower gas prices," Mazar said.

One area in which Alberta has a leg-up on B.C. is the pipeline infrastructure needed to carry gas to market.

Infrastructure in B.C. is less developed, but natural gas shipper TransCanada Corp. (TSX:TRP) has proposed to build a pipeline from Horn River into its Alberta system, with startup expected some time in 2011.

ExxonMobil and TransCanada are also planning to build a US$26-billion natural gas pipeline in Alaska, which is slated to start up some time after 2017. It will need to traverse northern B.C. in order to hook into TransCanada's Alberta network.

"Certainly it would help. There would be a trunk line that could be tied in from Horn River ultimately to get that gas to market. There is a certain amount of economies of scale by having both those plays," Mazar said.

Horn River has an estimated 250 trillion cubic feet of natural gas in the formation. Experts predict up to a fifth is recoverable.

Natural gas is extracted from the shale rock by either horizontal drilling or fracturing wells.

Shale gas production was long considered too expensive until new technologies were developed in recently years to tap into the hard-to-access resource at lower costs.

Copyright © 2009 The Canadian Press. All rights reserved.

http://www.google.com/hostednews/canadianpress/article/ALeqM5gAiokpb9njebGFwvLOGlrBD0NRrg

[Stingray2004]

Natural Gas Is The Key To B.C.'s Future Prosperity

B.C. has a rich endowment of this unconventional gas. It was the only jurisdiction in Canada to record an increase in natural gas production last year.

Two of the hottest plays in North America are the Montney tight-gas play and the Horn River Basin Shale in Northeastern B.C.. The potential exists to grow the production levels from these plays some two to three times in the next 10 to 20 years.

Since 2001, the entire [natural gas] industry has invested about $38 billion in the province.

Along the way, employment in the industry has grown 65 per cent to 21,000 direct jobs in 2007. That has led to about 60,000 to 70,000 support and service jobs in B.C. and across Canada.

Then there is the revenue that the industry generates for the provincial treasury in the form of royalties, land bonuses and taxes. All told, our industry has contributed approximately $17 billion to the province since 2001.

http://www.vancouversun.com/business/Natural+future+prosperity/2045695/story.html

I keep following the BC natural gas sector as it appears headed for phenemenal growth over the next decade. And the future potential to double/triple/quadruple natural gas revenue to the provincial treasury is substantial.

And that means potentially more future $capital investment$ dollars for infrastructure projects.:tup:

And the latest from the prolific Horn River basin from Nexen:

CALGARY, ALBERTA--(Marketwire - Sept. 21, 2009) - Nexen continues to make significant progress on its substantial Horn River shale gas position in north-east British Columbia following the conclusion of a recent three-well drilling and completion program. With five shale gas wells now on-stream, we are producing between 15-20 mmcf/d with the majority of production coming from the three new wells. These wells have a higher frac density than our earlier wells. Our land position here could support 500 to 700 wells.

We view the Horn River basin as one of the largest and most prolific shale gas plays on the continent - an observation with which many others agree."

http://www.nexeninc.com/Newsroom/News_Releases/release.asp?ReleaseId=1047939

And from Quicksilver Resources:

Tue Sep 22, 2009 (Reuters) - Shares of independent oil and natural gas company Quicksilver Resources Inc (KWK.N) went up as much as 15 percent Tuesday, a day after it reported positive results from a well at its Horn River Basin property in British Columbia.

The Fort Worth, Texas-based company said the D-50A well tested at an initial production rate of 13 million cubic feet per day (mmcfd) and was already averaging 10 mmcfd in its first month of production.

"Outside of the Barnett, which comprises the vast majority of proved reserves and houses much of the company's unbooked upside, the Horn River is Quicksilver's high potential area and a key factor in future growth"

http://www.reuters.com/article/hotStocksNews/idUSTRE58L30X20090922

[spaceprobe]

make a law stating that companies wanting to drill for gas in BC need to be headquartered in BC, just like Alberta did for the oil industry.

[Spork]

make a law stating that companies wanting to drill for gas in BC need to be headquartered in BC, just like Alberta did for the oil industry.

Here here. I wonder if this has a lot to do with the growth of Calgary as a business centre.

[EastVanMark]

make a law stating that companies wanting to drill for gas in BC need to be headquartered in BC, just like Alberta did for the oil industry.

Great idea. If that can't be done at least try to broker a deal whereby a more favorable royalty arrangement would be reached with any company willing to locate a head office hear in BC.

[Stingray2004]

OCTOBER B.C. OIL AND GAS RIGHTS SALE HIGHEST FOR 2009

VICTORIA – B.C.’s economy has received a much-needed boost with the October 2009 land rights sale, which resulted in $370 million in bonus bids, the sixth-largest sale on record, announced Minister of Energy, Mines and Petroleum Resources Blair Lekstrom. This brings the calendar year to date total to $700.6 million.

http://www2.news.gov.bc.ca/news_releases_2009-2013/2009EMPR0017-000519.htm

Most of the land rights sales were in the Montney tight shale natural gas play in the Dawson Creek region of NE BC. The Horn River natural gas shale play is situate in the Fort Nelson region.

BC's $700.6 million figure compared to Alberta's year to date figure of $262 million says it all... And that's all upfront cash in the bank.

[SpongeG]

I grew up in that area its oil and gas country for sure most residents would rather be part of Alberta though

[berrypicker]

^ Why??

[240glt]

"conservative values"

[twoNeurons]

They're welcome to move.

[SpongeG]

no they want to join alberta and take the gas and oil with them...

its more than just values - its just a feeling of being isolated from "victoria" and the rest of BC, they have more in common with Alberta since it is oil country most of its business ties are with Alberta - i would say 80% of the people I went to high school with ended up in Alberta or went to school in Alberta - it was very rare when they chose to go to a school in BC - Edmonton Oilers were always more popular than the Canucks etc

there was or maybe still is an idea to join Alberta - I think there is somewhere near the SE interior that feels the same way and would rather be Alberta than BC

anyway it would be a loss to BC - thats a lot of oil and jobs

[Locked In]

The 10-billion-barrel battle

1 man's campaign to end B.C.'s offshore drilling ban

http://www.cbc.ca/gfx/images/news/topstories/2009/11/20/tp-Henry-Lyatsky.JPG
Henry Lyatsky, a Calgary-based oil and mining industry consultant, says the 'silent majority' in B.C. wants a moratorium on offshore oil exploration lifted. (CBC)

Henry Lyatsky is a man on a mission.

The Calgary-based oil industry consultant is on a one-man campaign to lift the moratorium on offshore oil drilling on Canada’s West Coast.

While his message gets a sympathetic ear in his hometown, the centre of Canada’s oil industry, his mission is more of an uphill battle in British Columbia.

At stake are 9.8 billion barrels of oil — enough to supply all of Canada’s domestic needs for four years — and one of the most picturesque and rugged seascapes in the world. The oil is concentrated in the Queen Charlotte basin between northern Vancouver Island and Haida Gwaii, also known as the Queen Charlotte Islands.

Along with an estimated 40 trillion cubic feet of natural gas, it could exceed Newfoundland’s offshore reserves. Both Chevron and Royal Dutch Shell drilled test wells in the area before the ban was imposed but have not released their results.

Standing in the way is the moratorium on tanker traffic B.C. imposed in 1971 and the ban on exploration Ottawa imposed a year later. Provincial efforts in the 1980s to lift the federal ban foundered in 1989 along with the Exxon Valdez, which spilled 40 million litres of crude oil off the coast of Alaska.

In a commentary in the Oil and Gas Journal, Lyatsky argues the majority of residents in B.C. want the jobs and wealth that would come from development, but they have been drowned out by environmentalists.

“The revenues are huge for the province,” Lyatsky told CBC News. “Look at Newfoundland: They got rich off of offshore oil and look at the number of jobs that get created.”

http://www.cbc.ca/gfx/images/news/topstories/2009/11/20/tp-queen-charlotte..jpg
A view of sunset from Anthony Island at the southern tip of Haida Gwaii. (Chuck Stoody/Canadian Press)

Oonagh O’Connor of the Living Oceans Society takes issue with that.

“It has to be a very silent majority,” she said, given that thousands of people took part in federal hearings from 2003 to 2004 on whether to lift the moratorium and 75 per cent supported keeping it in place. All of the First Nations representatives who took part also opposed lifting the ban.

Still, in a province where the forestry industry is struggling, the unemployment rate is 8.3 per cent, and the provincial government raised $2.66 billion on the sale of onshore oil and gas exploration rights in 2008, the argument is getting some traction.

Offshore fields are much bigger, as are the resulting royalties to governments.

“The public seems to be on side, but the support for exploration is diffuse around the province,” Lyatsky said. “The opposition to exploration is in the minority but it’s concentrated, it’s vocal, and it’s committed, so it’s very forceful. What we need to do is to energize our own supporters, who are many, and simply overcome that opposition by the weight of democratic numbers.”

Blair Lekstrom, B.C.'s minister of energy, agrees with Lyatsky that the silent majority in B.C. supports lifting the moratorium. Lekstrom's government wants exploration to proceed but, he adds, "unless it can be done in an environmentally responsible and scientifically sound manner, then we wouldn't proceed."

http://www.cbc.ca/gfx/images/news/topstories/2009/11/20/tp-exxon-valdez.jpg
The worst oil spill in U.S. history leaked 40 million litres of crude into Alaska's Prince William Sound from the Exxon Valdez in March 1989. (Jack Smith/Associated Press)

Work with Ottawa is continuing, but "the reality is, this really is in the federal hands," Lekstrom said, adding "there is a challenge at this point," an apparent reference to the Conservative minority government's unwillingness to risk swing ridings in the province.

The federal department told CBC News it has no plans to lift the ban at this time.

Lyatsky wants the oil industry — investors, companies, professional associations and consultants — to mobilize opinion.

His timing might be problematic.

An earthquake measuring 6.6 shook the southern tip of Haida Gwaii on Nov. 17.

And on the other side of the Pacific, Australia recently set up a commission to investigate the country’s third-worst oil spill, when as much as 30,000 barrels leaked into the Timor Sea off the country’s northwestern coast. The spill was the first accident among 1,500 wells drilled in Australian waters since 1984, but it continued from Aug. 21 to Nov. 3 and was marked by a fire that burned for two days, destroying the rig.

http://www.cbc.ca/gfx/images/news/topstories/2009/11/20/tp-timor-spill.jpg
The West Atlas rig leaked oil for 10 weeks this fall into the Timor Sea 250 kilometres northwest of Australia. (AP Photo/PTTEP Australasia)

That’s troubling for O’Connor, especially from her perspective from the Living Oceans Society’s headquarters in the tiny fishing village of Sointula on the northern end of Vancouver Island.

“When the moratorium was put in place in 1972, it was done so because of concerns about the environment,” she said. “Now we know way more about the impacts of the offshore oil-and-gas industry on the environment. We know that despite modern technology, spills continue to happen.”

Lyatsky says all the objections to offshore drilling are overrated and have been already been answered through extensive experience elsewhere in the world.

O’Connor doubts that.

“When you live here,” she said, “and you depend on the coast, these concerns aren’t overrated. They are really important.”

Lyatsky believes his view will prevail.

“I would say it’s in our own hands," he said. "The chances are pretty good if we make the effort to push things forward. Nothing will happen if we do nothing. It can be done. I’m certain it can be done.”



Source: CBC (http://www.cbc.ca/money/story/2009/11/20/f-bc-offshore-drilling-moratorium.html)

[Stingray2004]

Some big things happening in BC's northeast natural gas sector. Remember that natural gas revenue (not oil) has always been the bread and butter resource revenue for the Alberta treasury.

Nexen Boss Muses About Gas Pipe to the Pacific

By MARKUS ERMISCH, Calgary Sun

February 17, 2011

Nexen CEO Marvin Romanow is floating the idea of yet another massive pipeline to the Pacific coast as Western Canadian energy producers are eyeing lucrative offshore markets to sell their wares.

The Calgary-based company has also started looking for a partner to develop its B.C. shale gas holdings.

Given the natural gas wealth trapped in the Horn River basin, it would make sense to build a pipeline from northeastern B.C. to a terminal on the coast, where the gas would be liquefied, loaded onto tankers and shipped to Asia.

A proposed gas terminal in Kitimat is in the midst of the regulatory process and could start up in 2015. A large pipe to collect Horn River gas, however, is a mere idea for now.

The sheer gas volumes, combined with the North American supply glut, support such a plan, Romanow said: the volume of gas found in the Horn River [basin of NE BC] equals the volumes found in all of Alberta.

“That’s not a trivial amount of natural gas,” he said.

”And having a single line that serves many regional producers, I think that would serve the government of Canada well, it would serve the government of B.C. well and it would serve the government of Alberta well, because we wouldn’t all be competing in probably what’s going to be an oversaturated North American natural gas market.”

Across the Pacific, due to the economic strength of the Asian economies, gas fetches a higher price and hence promises a higher profit. During the recession, China’s gas demand rose 11% while dropping 2% globally, says a recent IEA study.

http://www.calgarysun.com/money/2011/02/17/17315021.html


Opinion: Encana Deal Sign of Things to Come

By Deborah Yedlin, Calgary Herald

February 15, 2011

Encana's joint venture deal with PetroChina should be seen as a leading indicator for the North American natural gas business.

The $5.4-billion transaction, which will see PetroChina buy a 50 per cent interest in the Cutbank Ridge assets [within NE BC's Horn River Basin] that contain an estimated one trillion cubic feet of natural gas reserves, is not just another signal of Asia's voracious appetite for the commodity. It has to be seen as one more step in the direction that will see natural gas exported from these shores.

It is Encana's second such deal in less than a year; last March it inked an agreement with the Korea Gas Corp. to develop a portion of its assets in the Horn River and Montney regions of northeast British Columbia.

It also follows on a growing trend of energy companies with shale gas assets partnering with deep-pocketed investors as a way to accelerate the development of the assets while decreasing the capital risk.

And don't think this is the last deal that will be done. It's not out of the question Encana could strike another one of similar magnitude, potentially involving more of the Horn River as that play is advanced, and it already has $900 million in commitments for similar deals. If that happens, Encana will have attracted more than $10 billion in the last three years in joint venture agreements.

That's big coin in the natural gas world. But here is where it gets a bit more interesting.

Rumours have been floating around for a while that two Canadian producers are looking at the possibility of developing a second liquefied natural gas export terminal -in addition to the one currently proposed at Kitimat, B.C; one of those companies could very well be Encana.

Either way, it stands to reason Kogas, PetroChina and Mitsubishi would not have invested the money they have without some strong, positive indications that an export facility will happen off the coast of B.C.

The attraction to sending it offshore is to capture the pricing available in Asian markets.

There is far more to the Encana deal -beyond the company's corporate objectives -than meets the eye: it's about Asia's need to secure supply, the need to generate North American export capacity and the need to boost consumption of an environmentally friendly energy source.

Stay tuned on this one; the landscape will likely look very different at this time, next year.

http://www.calgaryherald.com/business/Opinion+Encana+deal+sign+things+come/4282928/story.html#ixzz1EWleRu49

[worldwide]

seeing as fossil fuels are a non-renewable resource, we should probably use them to sustain our own economy well into the future instead of selling them off now to make a quick buck.

[zivan56]

Another great thing about natural gas is that its very easy/cheap to convert a gasoline car to run on CNG/LPG...and it costs significantly less to run/extends engine life.

[Stingray2004]

More interesting stuff coming out of BC's gas patch:

Sasol Doubles Up On Talisman Gas Plays [NE BC]
NATHAN VANDERKLIPPE
CALGARY— From Wednesday's Globe and Mail
Published Tuesday, Mar. 08, 2011 7:05AM EST


South African firm is doubling its investment in Canada, buying into another of Talisman Energy Inc.’s major natural gas properties in British Columbia.

Sasol Ltd. will pay $1.05-billion for a 50-per-cent stake in a deposit called “Cypress A,” which contains an estimated 11.2 trillion cubic feet of recoverable gas.

Less than three months ago, Sasol paid the same amount for an identical stake in Farrell Creek, B.C., which is also a shale gas property and contains an estimated 9.6 trillion cubic feet of gas.

The deals mark the latest investments by international interests on Canada’s shale gas bounty, as the industry explores new markets and non-traditional uses for the huge deposits.

The latest agreement, Mr. Mann said, “deepens the strategic relationship with Sasol,” which agreed to buy a greater stake after winning a bidding round for Farrell Creek, where the two companies will drill 70 wells this year.

Both Talisman lands are part of the Montney, one of northeastern British Columbia’s two headline plays – the other is the Horn River – that contain massive gas reserves and have attracted billions in foreign investment in the past year. The two properties in the Sasol deals alone contain enough gas to supply all of Canada for six years.

Because of their huge size, and distance from traditional eastern markets, the Montney and Horn River have triggered a rush to find alternative uses and markets for the gas. Apache Canada Ltd. and EOG Resources Canada Inc. plan to decide later this year whether they will build a proposed $3.5-billion liquefied natural gas terminal, which would allow exports to Asia. Numerous other companies, including Royal Dutch Shell PLC, Mitsubishi Corp. and Korea Gas Corp., have examined similar plans.

Sasol has introduced another potential use for the gas bounty: transforming it into liquid fuels such as diesel, which is usually derived from crude oil. The Johannesburg-based company is a world leader in that technology, and the two B.C. deals demonstrate a growing confidence in establishing a beachhead in Canada.

Sasol said in a statement that the new purchase will “further cement” its relationship with Talisman, and allow it to “to scale up” a gas-to-liquids facility, if one is ever built.

http://www.theglobeandmail.com/globe-investor/sasol-doubles-up-on-talisman-gas-plays/article1933453/

LNG Export Facility Turns Horn River [NE BC] Into an Oil Play

Papa also spoke about EOG’s Horn River development. An extremely intriguing comment of his was that he considers Horn River basically to be an oil project because of the prices he expects to get for the gas via an LNG export plant at Kitimat.

I’ve been looking at several Canadian producers with undeveloped land in the Horn River region. If production there commands premium pricing some of these companies may be very attractive opportunities.

Papa on the Horn River:

In conjunction with Apache, we've made good progress on the Kitimat LNG Export Facility project. We finalized an agreement with the Haisla First Nation regarding the sites for the LNG plant. We bought out the original owners of the Kitimat project, and with our partner, we've entered into an agreement to purchase full ownership of the proposed gas pipeline that will connect the existing pipeline network to Kitimat. We've also began discussions with potential customers on the off state contracts and our next step is to secure oil indexed LNG contracts. In my opinion, if any LNG export plants are built in North America, Kitimat is the most likely to happen. In my mind, our Horn River development is an oil project because we expect the gas to be sold at an oil index price.

http://seekingalpha.com/article/256975-eog-resources-leveraging-the-power-of-high-return-oil-production

[huenthar]

Is anyone else on this forum concerned about the (apparent lack of) regulation over the impact of gas drilling on groundwater? Specifically, who exactly will be responsible for the cleanup of potentially contaminated aquifers? Money today is great, but not if it leaves us huge bills tomorrow.

My current feelings are, drill away, but only if 1. we know exactly what's in the fracking fluid; and 2. companies agree to the legal responsibility to pay for any future contamination issues (or maybe a % equal to the % of profit they currently make - with government being responsible for the remaining % equal to their share of revenues), as well as cleaning up wells, pipelines, equipment etc. when the wells run dry (instead of just abandoning this stuff).

I have the feeling people would find 2. unreasonable... but I think companies (and governments) must assess the risks if they want to pursue the reward - and if those risks are really too high, then is it really worth it to exploit natural gas at this time at all?

Any thoughts? Anyone who knows more about it than me?

Random Google'd source: http://www.watershedsentinel.ca/content/fracking-natural-gas-affects-water-quality

[SFUVancouver]

Shale gas fraking is becoming a huge issue. The documentary Gasland, which was nominated for an Oscar is all about it.

Here is link to the movie's website: http://www.gaslandthemovie.com/
And here is the full film (watch it soon while it is still available) http://videosift.com/video/Gasland-full-film-1

Here is an article in the NYTimes about the technique of "fracking": http://www.nytimes.com/2011/02/27/us/27gas.html
They have a great infographic too: http://www.nytimes.com/interactive/2011/02/27/us/fracking.html?ref=us

The practice of disposing of fracking fluid by injecting it into the earth is believed to be responsible for the more than 800 earthquakes that have rocked Little Rock Arkansas in the last 6 months with the biggest registering as a 4.5. This in an area that is supposed to be very geologically stable.
http://www.huffingtonpost.com/2011/03/06/fracking-arkansas-earthquakes_n_831633.html

It's all certainly worth being vigilant about, especially because the fracking fluids can really pollute the water table and the many of the known chemicals in the fracking fluid are carcinogenic and do not degrade. It is also really worthwhile for Environment Canada and/or provincial environment ministries to do their own independent research on the impact of fracking fluid on drinking water and human health since we cannot rely on the US EPA for help in this case. This is because the practice of fracking is exempt from the US Clean Water Act, the Clean Air Act, and the Superfund Act.

[Stingray2004]

Shale Gas Could Herald Era Of Unparalled Wealth In B.C.

By Gordon Hamilton,
Postmedia News
March 14, 2011

VANCOUVER — Locked within the shale deposits of northeastern British Columbia lies a natural gas reserve of unparalleled wealth that could push the province into a resource boom unrivalled since the development 50 years ago of the pulp-and-paper industry.


This resource is nothing more than individual, tiny bubbles of hydrocarbon, all that remains of a single organism that lived and died in a primordial sea and was buried in the mud millions of years ago. But the accumulation of billions of such organisms over time adds up to gas deposits of 250 trillion cubic feet to 1,000 trillion cubic feet, according to the provincial energy ministry.


How much of that is recoverable is a work in progress as companies drill into it. But even at today's low price for natural gas of about $3 per 1,000 cubic feet at the wellhead, those reservoirs could have a value beginning at $750 billion. And the more companies drill, the more gas they find.


"We haven't finalized booking the reserves in the shale-gas plays," said Ken Paulson, chief engineer and deputy commissioner at the B.C. Oil and Gas Commission. "We are still getting information from some of the plays which allows us to refine our estimates as to how much hydrocarbon is actually in these reservoirs. But it's a lot."


Energy Minister Steve Thomson said shale gas is becoming mainstream development for the petroleum industry in B.C. "The magnitude and nature of B.C.'s shale-gas resources creates opportunities for long-term development planning by both industry and government," he said in an email to The Sun.


Northeastern B.C. contains four major gas formations: The Montney basin near Dawson Creek, the Horn River and Liard basins northwest of Fort Nelson, and the Cordova Embayment, east of Fort Nelson. But the promise of wealth that they offer is tempered by several facts: They are far from North American markets for gas; they are more costly to get out of the ground than conventional reserves; and the way the gas is being extracted is drawing growing public concern.


The shale gas deposits have triggered a slew of deals worth billions of dollars as global companies jockey to gain a foothold in this new resource gold rush. Petro China's $5.4-billion investment with Encana, for a 50-per-cent stake in one B.C. gas deposit alone, is the largest, while South African synthetic fuel producer Sasol's $2-billion investment in two of Talisman Energy's gas holdings perhaps brings the most promise.


Sasol is a world-leader in technology of converting natural gas to synthetic diesel, and it has agreed with Talisman to conduct a feasibility study around the economic viability of a facility in Western Canada to convert natural gas to liquid fuels. "It's exciting, innovative stuff," said Travis Davies of the Canadian Association of Petroleum Producers.


Development of the shale-gas deposits brings with it a whole new way of looking at the province's resource wealth. But it also brings questions on how the gas is being extracted and whether it will trigger a round of value-added investment similar to the sprouting of pulp and paper mills that came when new provincial forest tenures and policies spurred logging in Interior forests in the 1960s.

<snip>

To access B.C. shale gas, companies use a technique called hydro-fracturing, or fracking, to release the trapped bubbles, which can be in shale deposits one to two kilometres below the surface. The technique involves drilling a vertical well about 18 centimetres wide until it reaches the shale layer. The drill bore then is gradually curved to horizontal, where it can go for another two kilometres through the shale.


Water, sand and a lubricating solution are then pumped at high pressure into the well. The water pressure fractures the shale into tiny pieces, creating millions of surfaces, which release their gas. The sand keeps the pieces apart and the gas within the shale is then forced to the well by the pressure of the rock above. But fracking is raising concerns over the chemicals being used and the wisdom of fracturing part of the earth's crust.


Some are blaming it for a series of mini-earthquakes in Arkansas, a region that is generally quake-free. Further, environmentalists fears of contamination of the aquifer if gases or chemicals escape. Last week, the province of Quebec placed a two-year moratorium on fracking in shale-gas deposits in that province while it develops regulations. Energy minister Thomson said the situation in Quebec is far different than here.


"This is a province where oil and gas exploration has been taking place for decades. Quebec, on the other hand, is only beginning to establish an oil and gas sector," he said in the email. "It makes sense for Quebec to take a prudent approach as they do not have the background and regulatory structure in place like we do." Paulson said the province has kept abreast of technological change by expanding its regulatory regime to include fracking.


The Oil and Gas Activities Act, which came into effect last October, contains regulations that specifically address drilling of shale gas wells and hydro-fracturing, Paulson said. Water stewardship is addressed in regulations and companies are required to dispose of chemicals safely. Companies keep their chemical solutions secret, saying they are proprietary. It amounts to less than one per cent of what is injected, according to the Canadian Association of Petroleum Producers.


The commission does not require them to divulge their chemical mix, but they must keep on-site a list of the chemicals they use in fracking. If for example, cross-contamination by one fracture full of fluid extended into an adjacent fracture created by another well, then the commission would want to know what exactly is in the solution. That has never happened, Paulson said.

© Copyright (c) The Vancouver Sun


http://www.vancouversun.com/technology/Shale+could+herald+unparalled+wealth/4435487/story.html#ixzz1Gb01HdaH

[SpikePhanta]

seeing as fossil fuels are a non-renewable resource, we should probably use them to sustain our own economy well into the future instead of selling them off now to make a quick buck.

I concur


I also think that the idea of having them have offices located in BC is a good idea as well.

[Alex Mackinnon]

Or use them to provide the financing to let our economy transition away from them...