Major hurdles need to be cleared for northeastern B.C. natural gas to reach its potential, especially as LNG projects try to stick with timelines, face competitive threats, and address environmental issues and First Nations’ concerns.
Wood Mackenzie, the global energy consultancy, says consolidation is inevitable to corral costs. A project led by British-based BG Group PLC, for instance, has held talks with Petronas to build a shared natural gas pipeline in British Columbia, instead of constructing two competing lines.
There are also lingering concerns about hydraulic fracturing, or fracking, especially the huge quantities of water that are mixed with chemicals and then pumped into the ground. Geoscience BC, a not-for-profit organization, plans to step up its scientific studies of water supply and quality related to fracking in northeastern British Columbia.
In a letter to Ms. Clark earlier this month, Chief Karen Ogen of the Wet’suwet’en First Nation says the B.C. government has a duty to consult with aboriginals “for the exploitation of resources, including when, by whom and how.”
Ellis Ross, chief councillor of the Haisla First Nation near Kitimat, supports LNG development in principle, but cautions that natural gas drilling and LNG terminals must meet or exceed environmental provincial and federal standards. The amount of money being contemplated for natural gas and LNG investment is staggering, Mr. Ross says, noting that he has gone from budgeting $100,000 for a new service station for cars in his village to scrutinizing how the Haisla might receive spinoff benefits from multibillion-dollar LNG projects.
While B.C. LNG projects must find ways to overcome obstacles, the provincial energy regulator is gearing up for busy times ahead.
“When somebody makes a financial decision, a final investment decision, on an LNG plant and gas pipeline, we anticipate an increase in activity in the northeast,” says Paul Jeakins, commissioner of the B.C. Oil and Gas Commission.
When Mr. Jeakins started his job as commissioner in 2006, he had 120 people on staff. Now, there are more than 210, and the workload promises to increase.
Eight years ago, unconventional shale gas plays were in their infancy in northeastern British Columbia, but improved technology has made natural gas buried deep beneath the surface economically viable, despite being trapped in tight spaces in what appear to be solid rock to the human eye. “That’s the thing about shale. It’s like this table. You can barely get your thumbnail into it. It’s not porous like some of the old conventional pools that we used to have. The only way to get it out is by fracturing it,” Mr. Jeakins says.
At Shell’s Groundbirch project, the company has nearly 300 workers and another 200 people on contract, such as those employed by Nabors Industries Ltd., a leading provider of drilling and oil field services. Other contractors include Bonnett’s Energy Corp. and Calfrac Well Services Ltd.
After initial drilling, rig workers use fracking. Multistage fracking has brought a manufacturing mindset to drilling sites in northeastern British Columbia, in contrast to conventional practises found at exploration and development operations.
The B.C. portion of the Montney play contains an estimated 271 trillion cubic feet of marketable natural gas and the Alberta side holds another 178 trillion cubic feet, according to a recent study by the National Energy Board and others. That amount of marketable natural gas is the equivalent of meeting nearly 160 years’ worth of Canada’s consumption, and new technology could increase reserve estimates in future.
Shell’s Mr. Tetrault likens the northeastern B.C. gas play to harvesting a known resource. Today’s fracking is far different than the old days of exploratory drilling. “You won’t hear ‘Whoa, we got it!’ Here, you know where it is,” Mr. Tetrault says.
It’s that technology that has paved the way for B.C. to make its LNG dream real.
As Mr. Tetrault says: “The prize from this source rock is tremendous.”