|
Posted Jul 17, 2009, 2:53 AM
|
|
Registered User
|
|
Join Date: Jan 2004
Location: White Rock, BC (Metro Vancouver)
Posts: 3,145
|
|
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.
Quote:
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...rticle1212914/
From the Wall Street Journal:
Quote:
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
Quote:
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/can...wvLOGlrBD0NRrg
Last edited by Stingray2004; Jul 17, 2009 at 3:18 AM.
|
|
|