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Providing coverage of Alaska and northern Canada's oil and gas industry
September 2008

Vol. 13, No. 38 Week of September 21, 2008

Region caught in energy squeeze

The sudden emergence of an energy shortage in northeastern British Columbia could put a crimp on what is rated as North America’s liveliest gas play.

Fort Nelson, the major service center for the Horn River Basin, is caught in an electricity squeeze that could inhibit gas exploration.

“New supply is urgently required” to meet customer demand in the area “under any scenario of future load growth analyzed,” according to a filing with the B.C. Utilities Commission.

It also says not only is there no capacity to meet economic growth, but some existing customers are facing the prospect of blackouts.

Currently, Fort Nelson – which is outside the B.C. electricity grid — relies on local gas-fired generators for its power, with backup from a public utility in northwestern Alberta.

The document, attached to B.C. Hydro’s 2008 long-term electricity purchase plan, said it is likely B.C. will have to rely on Alberta until at least 2013 for any significant power additions.

Although a number of gas companies exploring in the region meet their own power needs by using diesel fuel to fire generators, those costs are in danger as limits are imposed on greenhouse gas emissions and carbon taxes are introduced.

In addition, B.C. Hydro estimates another 100 to 250 megawatts of power could be needed for Horn River exploration and a possible Spectra Energy project to pump carbon dioxide into underground storage.

A spokeswoman for B.C. Hydro told the Vancouver Sun that the challenge facing the utility is “huge and rapid growth … it can be difficult to predict where the growth is going to be and how much energy we will need. But we want to support economic development in the area.”

That could involve connecting the Fort Nelson area to B.C’s mainline grid rather than spending C$400 million on a 180-mile high-voltage line from the Peace River region of Alberta that would take until 2016 to complete.

Meanwhile, partnerships are being formed by large producers to meet some of their own needs in the short term and eventually to tie into the Hydro grid.

–Gary Park






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