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B.C. lifts lid on new gas play Government discloses ‘sleeping dog’ in Liard basin, west of Horn River, Montney plays; operators tight-lipped about plans, results Gary Park For Petroleum News
It’s in a hush-hush mode right now, but E&P companies in British Columbia could be quietly extending the province’s gas hot spot beyond the Montney and Horn River formations.
One of the first public hints came at a Northeast British Columbia Natural Gas Symposium in Calgary at the end of September, when a senior government official said the little-explored Liard basin — west of the Horn River shale gas basin and 65 miles northwest of Fort Nelson — is generating strong interest at monthly land auctions.
Vic Levson, executive director of the Resource Development and Geoscience Branch of the B.C. Energy Ministry, said the region is a “sleeping dog that has been lying quiet.”
But bidders committed C$48.3 million in the first seven months of 2009 to secure exploration rights in the basin, compared with C$18.5 million for all of 2008, doubling the average price to C$1,500 per hectare.
However, he said the companies are “keeping a pretty low profile,” although some of the operators are shifting their exploration efforts to unconventional from conventional prospects.
The players include two majors — Apache and EOG Resources — while three juniors (a partnership of Questerre Energy and Transeuro Energy and Stone Mountain Resources) have embarked on evaluation programs.
Levson said the government is hopeful that the early exploration is the start of a new trend.
He said the province believes the basin is a “good target … we’d like to see more companies” take an interest in the area.
B.C. tops land sales Otherwise, British Columbia, having topped Canada’s provincial land sales for the first time in 2008, remains the frontrunner.
For the first nine months of the year, it generated C$330 million in successful bids, compared with C$247 million in Alberta and C$51 million in Saskatchewan.
That total was a starting C$3.5 billion behind the total for the same period last year, with British Columbia down about C$2 billion, Alberta off by C$715 million and Saskatchewan taking a C$797 million tumble, all paying the price for the industry-wide downturn.
British Columbia’s per-hectare average price plunged to C$1,281 from C$3,820 in the first nine months of 2008; Alberta has edged up each quarter from C$119 to C$166 and C$257, but lags far behind the 2008 average of C$377; and Saskatchewan nosedived to C$297 from C$1,781.
There was no more hope for Alberta at its first October auction, which drew a mere C$21.9 million in successful bids and an average C$204 per hectare, compared with the C$38.7 million and C$329 per hectare at the comparable 2008 sale.
B.C. sees move to drilling Otherwise, British Columbia is seeing the first signs that blockbuster land sales in 2007 and 2008 are being translated into drilling plans, although what is in store for the upcoming peak winter season has yet to be disclosed.
For the first nine months of 2009, the regulator has approved 532 new well licenses. Although that is down more than 30 percent from the same period of 2008, the September permits totaled 68, the most in any month since March and only 11 behind September 2008.
Alex Ferguson, commissioner of the B.C. Oil and Gas Commission, said the mood among operators is more positive than it was a few months ago, but until companies complete their budget plans the government is in a “blind spot.”
Over the past seven years, the commission has approved 32 experimental schemes for shale gas formations, allowing ongoing research in drilling, completion and/or production technology.
For Horn River those in the experimental phase include majors such as Imperial Oil, EOG Resources Canada and Hunt Oil Company of Canada and smaller players such as Stone Mountain, Kodiak Bear Energy, Quicksilver Resources Canada and Storm Gas Resource.
EnCana has led the way in Horn River since 2001, listed as operator of 90 wells, 79 categorized as nonexperimental and five wells licensed as experimental, but not yet drilled, a commission report said.
It said that after completing its 2008 drilling program, EnCana reported average per well production rates of 5 million cubic feet per day, while the first wells of 2009 have posted flow rates of 9.5 million to 11 million cubic feet per day after 15 days.
The lightly explored Beaver River area (incorporating the Liard basin and Fold Belt region) 100 miles northwest of Fort Nelson, has stirred interest among producers interested in evaluating and testing the potential of Mississippian-aged shales. The commission said some promising results have already emerged from tests.
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