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February 2006

Vol. 11, No. 9 Week of February 26, 2006

B.C. wants fresh look at offshore ban

Province hopes to end freezes, get seismic work done; immediate focus is getting work done in lightly explored onshore basins

By Gary Park

For Petroleum News

British Columbia is wasting no time reviving its campaign to remove 35 years of bans on offshore exploration as the new federal government tries to find its feet.

After a quiet year, B.C. Energy Minister Richard Neufeld has stirred back to life, expressing a hope that freshly minted Natural Resources Minister Gary Lunn (who represents a British Columbia constituency in the House of Commons) will be open to fresh arguments on removing the moratorium.

Under the Conservative government, with Prime Minister Stephen Harper coming from Calgary, “I think we’re going to have a fairly good chance of moving the file forward,” Neufeld told the Canadian Association of Petroleum Production Accounting.

He said B.C.’s objective is to end the freezes imposed in 1971 and 1972 and get some seismic work under way to better firm up the potential of four offshore basins, which the Geological Survey of Canada has estimated could hold 9.8 billion barrels of oil and 43.4 trillion cubic feet of natural gas.

But Neufeld conceded that he will probably be long gone from public life before an offshore industry is operating.

To date, Lunn has indicated only that the Harper government will be receptive to taking a fresh look at the issue based on the latest scientific data.

The issues on the table are complex, covering jurisdictional, environmental and socio-economic matters, which a government-appointed B.C. Offshore Oil and Gas Team and Neufeld’s ministry are working on as they gather information and study regulations from around the world.

Government also working onshore

But rather than devoting all of its efforts to the offshore, the B.C. government is turning its attention to the more immediate prospect of exploring for gas in the province’s Central Interior basins at Nechako and Bowser.

“We have to work hard with the industry to get them to commit some money” to these lightly explored regions, he said.

Neufeld conceded to his Calgary audience that these basins are a tougher challenge because they lack oil and gas infrastructure, but “we’re going to figure out a way” to solve those problems.

He said coalbed methane is a “huge opportunity,” with an estimated 85 trillion cubic feet of potential reserves scattered across the province, while the hotbed of activity in the northeast corner still has 26-44 tcf of potential.

Neufeld said annual investment has climbed from C$1.2 billion in 2001-02 to C$4 billion, with the Canadian Association of Petroleum Producers predicting capital spending will climb to C$4.7 billion in 2006.

The province hopes to announce a new royalty regime this year that could cover shale gas, tight gas, coalbed methane and gas hydrates along with enhanced oil recovery and gas that is isolated from infrastructure. It will be based on economics rather than specific resources.






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