HOME PAGE SUBSCRIPTIONS, Print Editions, Newsletter PRODUCTS READ THE PETROLEUM NEWS ARCHIVE! ADVERTISING INFORMATION EVENTS PAY HERE

Providing coverage of Alaska and northern Canada's oil and gas industry
June 2009

Vol. 14, No. 26 Week of June 28, 2009

B.C. leaves Alberta in lurch

Gary Park

For Petroleum News

While Alberta stumbles in its attempts to match the competitive edge enjoyed by British Columbia, its fleet-footed neighbor shows every sign of widening the gap.

In fact, without saying it has nothing to learn from its once-unrivalled Canadian neighbor, British Columbia is turning its focus from Alberta to Texas and other United States jurisdictions, where the future lies in shale gas.

Gordon Goodman, an assistant deputy minister in British Columbia’s Ministry of Energy, Mines and Petroleum Resources, laid out for a Calgary audience earlier in June what his province is doing to “make sure we put a competitive lens on everything we do.”

He conceded there are problems comparing the resource ownership structure in Texas and British Columbia.

“But we believe that on the competitive side we have a good understanding of where we need to be and where we need to go in terms of our shale gas,” Goodman said.

Having laid the groundwork over the last couple of years through record sales of government-owned exploration rights, peaking in 2008 at C$2.6 billion, British Columbia’s objective now is to almost double its annual gas production to 2 trillion cubic feet by 2020.

Changes for unconventional gas

Goodman said the province initially underestimated the need for a shift in its business practices from conventional to unconventional gas activity, but it has been working closely with explorers, producers and the service sector on multipad wells and the need for large quantities of sand and water to fracture rock.

The province has also been upgrading its consultation process with communities and labor organizations, while creating equity opportunities for First Nations.

He said British Columbia is committed to getting ahead of issues such as the impact on wildlife and water by hosting a workshop with the Fort Nelson First Nation on how much water is needed, where it will come from and how it will be disposed of.

Noting that Texas operators can easily work year round because of their weather conditions, Goodman said the province is weighing what credits it can offer to drill in the winter and complete wells in summer.

In addition, its new net profit royalty program is “one of the keys to making these plays come alive” by sharing the risk with companies until capital costs are paid out, he said.

Four applications approved

So far four applications have been approved under the program and more details should soon be available so that companies can meet their fall cycle for capital budgets.

Goodman said British Columbia may also expand a program that pays 50 percent of approved road and pipeline costs by adding the cost of electrical transmission lines to mitigate operators’ costs and lowering carbon dioxide emissions.

Chris Theal, research director at Tristone Capital, suggested the message to Alberta is to take a page out of the British Columbia playbook to promote investment in unconventional resource development.

He said that regardless of whether British Columbia’s incentives involve well-depth adjustments or summer drilling they provide a “very transparent and stable fiscal framework.”

Theal said the Horn River regime is similar to what Alberta offers oil sands developers by limiting royalties to 2 percent until capital costs are covered, thus promoting “all the upfront investment that’s required.”






Petroleum News - Phone: 1-907 522-9469
[email protected] --- https://www.petroleumnews.com ---
S U B S C R I B E

Copyright Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA)Š1999-2019 All rights reserved. The content of this article and website may not be copied, replaced, distributed, published, displayed or transferred in any form or by any means except with the prior written permission of Petroleum Newspapers of Alaska, LLC (Petroleum News)(PNA). Copyright infringement is a violation of federal law.