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B.C. struggles with coalbed methane Shell Canada takes ‘time out’ from Klappan play for concerns of aboriginal communities, shrinking chances of ‘08 production Gary Park For Petroleum News
British Columbia’s hopes of becoming the second Canadian province after Alberta to commercially produce coalbed methane have been narrowed to two junior producers.
Shell Canada’s Klappan play in the northwestern Bowser basin, tagged as a coalbed methane resource capable of challenging North America’s largest plays, has been shelved for possibly a year.
The company has taken a time out from its drilling plans at the request of aboriginal communities in the area.
The Tahtlan Central Council, representing the Tahtlan and Iskut Indian tribes, and the Tahtlan First Nation, asked for more information about the plans.
The Tahtlan are claiming the Klappan region as traditional territory, which they dub the Sacred Headwaters because it includes the salmon-bearing Skeena, Nass and Stikine rivers.
There has also been significant opposition from groups worried about the impact of coalbed methane activity on water and wildlife.
Break to facilitate talks Shell Canada decided to “take a pause” to facilitate its discussions with the Tahtlan.
In 2004 it was awarded about 102,000 acres of petroleum and natural gas exploration tenure in the Klappan area and followed that with three wells while gathering some environmental baseline data.
Exploration activity was postponed in 2005 and 2006 to allow the Native community “more time to work through their internal issues about resource development.”
The process took a sharp downward turn in 2007 when attempts to complete some roadwork were blockaded by the Klabona Keepers Society, members of the Iskut First Nation, while several environmental groups co-signed a letter opposing coalbed methane drilling.
Shell Canada noted that all three exploratory wells in 2004 were drilled on previously disturbed sites, where substantial coal mining exploration occurred in the 1970s.
In addition, the company said construction and camp work was done under contract with the Tahtlan Nation Development Corp., which included an economic benefit to the community.
Shell Canada is now into the fifth year of an eight-year tenure, which it hopes will enable it to verify the presence of a commercially viable resource as well as determine whether there is water in the coal that can be managed.
Gas in area very dry Results from two of the three test holes indicated the gas in place could exceed 45 billion cubic feet per section, said Barry Ryan, a coal and coalbed methane specialist in the British Columbia government’s Ministry of Energy, Mines and Petroleum Resources.
The estimate of resource density was based on the average gas content in the three Shell wells and regional coal thickness estimated from previous exploration by Gulf Canada Resources.
Ryan described the gas as very dry with a low carbon dioxide content.
He said the early estimates point to gas-in-place that would exceed the San Juan basin in the U.S. and far surpass the Powder River and Rayton plays in the U.S. and the Horseshoe Canyon in Alberta.
Hopes on juniors The rapidly fading chances that B.C. can bring coalbed methane onstream this year are now pinned on two junior producers.
Canadian Spirit Resources and Hudson’s Hope Gas aim to start selling coalbed methane from the Peace River coalfield in the province’s northeastern corner.
Ryan said the Peace River has a substantial in-place resource, although the carbon dioxide content can range from about 5 percent to 15 percent. Both companies are studying the removal of CO2 before sending the gas to market.
Sproule Associates estimated Canadian Spirit has 1.8 trillion cubic feet of raw coalbed methane and shale gas in place in the Farrell Creek area.
Canadian Spirit has completed about half of the 17 wells it has scheduled for 2008, while Hudson’s Hope, a wholly owned unit of Houston-based GeoMet, is targeting nine wells for the year.
In the southeast region’s Elk Valley coal basin, EnCana drilled 17 wells in the 2001-04 period before the lease was taken over by Storm Cat Energy, which has completed a number of wells over the past two years and said earlier this year it was testing nine wells.
In the nearby Crowsnest coalfield Chevron Canada drilled three wells in 2003 and Shell Canada drilled two holes, but there has been no indication of follow-up work.
BP has the exclusive right to acquire coalbed methane rights on about 80,000 acres of the Crowsnest area and those negotiations are under way, but BP is avoiding the Flathead area near the U.S. border because of a controversy over the possible impact on water quality in the Flathead River which crosses the B.C.-Montana border.
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