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Canada’s Montney Natural Gas Basin – Game Changer?

Canada’s energy riches seem to be destined to just expand.

According to the authoritative U.S. government’s Energy Information Administration, “Canada is one of the world's five largest energy producers and is the principal source of U.S. energy imports… (and) Canada is the world's third-largest producer of dry natural gas and the source of most U.S. natural gas imports.”

In yet more news from Canada, a joint federal-provincial government report released last week estimates there are huge natural gas resources in the important Montney gas basin that straddles British Columbia and Alberta. According to the study conducted by the National Energy Board, the British Columbia Oil and Gas Commission, Alberta’s energy regulator and the newly created British Columbia Ministry of Natural Gas Development, new estimates of the Montney basin’s reserves more than double the previous amounts of natural gas resources in British Columbia, which will help underwrite the province’s efforts to launch a new liquefied natural gas export industry to Asia.

How much?

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The Montney basin could contain up to 449 trillion cubic feet of natural gas that can be economically extracted. The 449 tcb estimate would be enough natural gas to supply Canada’s needs for the next 145 years, placing the Montney basin among the top natural gas basins in the world, behind Qatar in the Middle East but ahead of the Russian Urengoi basin, according to Canada’s National Energy Board. This is the first time the recoverable unconventional gas and oil potential was evaluated in the Montney Basin located in northeastern B.C. and northwestern Alberta. Production in the Montney stood at 1.7 billion cubic feet a day last year, slightly more than 12 percent of Canada’s total production of 13.9 bcfd, according to the NEB.

How are these potential riches regarded in Ottawa? According to Canada’s National Energy Board supply analyst Mike Johnson, the Montney basin exceeds resource assessments of the prolific Marcellus and Haynesville shale plays in the United States, with Johnson adding, “When we first started this we kind of all suspected that it was going to be a large result, only because it’s a very big formation with quite a lot of potential all the way through it. But when we finally did run the numbers it was surprising how large they were.” Of the estimated 449 tcb, there are also 14.52 billion barrels of petroleum liquids and 1.12 billion barrels of oil available for extraction.

B.C.’s minister of natural gas development Rich Coleman said that the recent reserves resource assessment shows the formation “will support economic activity in our province for a very long time as a supply hub for liquefied natural gas development.”

The British Columbian government is expecting LNG to create more than 100,000 jobs and to eventually eliminate its massive debt, while international energy companies are interested to develop the region as well, with hopes to ship its liquefied natural gas export supplies to Asia.

So much for the good news – how to move this hydrocarbon largesse to markets?

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Roughly a dozen or so projects are on the drawing board to export natural gas in the form of LNG from terminals in northwestern B.C. to potential customers in eastern Asia. British-based BG Group chief executive Chris Finlayson noting that a joint venture was required given the immense start-up costs said, “We certainly view it as extremely advantageous to share infrastructure where that is possible between projects. And clearly we have a possibility of doing that on Ridley Island, and Lelu Island with the Petronas project there… We are having some discussions clearly with Petronas as our neighbors anyway at the site there. We are looking at where there is potential for cooperation.”

Given the potential riches of the Montney Basin and the business friendly environment of conservative Prime Minister Stephen Harper, it would seem that the development of Montney Basin is not a question of if, but when.

By. John C.K. Daly of Oilprice.com

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