The solution for North America’s energy demand and environmental objectives is found in shale gas located in British Columbia’s Horn River and Montney shale basins. British Columbia is incredibly fortunate to have such a massive amount of natural gas – a viable, cleaner burning resource then current conventional resources derived from oil. It is easy to look beyond the market and current economic turmoil towards a future where British Columbia might become the number one producer and exporter of natural gas in Canada shipping to markets in the USA and Asia where natural gas is increasing in demand.
Currently, the Province of Alberta is the number one exporter of oil and natural gas and oil to our energy hungry neighbours to the south. The Alberta oil sands are key to the long-term security and supply of oil to the USA and despite current concerns about the carbon emissions this growing demand will not change. The US demand for Alberta oil sands will only increase and technology will eventually reduce the carbon emissions.
The next shoe to fall is BC shale gas. Long term natural gas demand will grow worldwide likely to double in the next year from current prices. Billions of dollars in infrastructure spending in British Columbia over the last couple months will increase access to the Horn River and reduce operating costs for exploration and development companies. In the last few months there has been a number of key announcements;
- January 4, 2009 – Encana announces the first CDN$400 million dollar investment in building their multi-billion dollar Cabin Gas plant located 60km northeast of Fort Nelson;
- February 26, 2009 – TransCanada announces it will invest CDN$340 million on a new Horn River pipeline to be completed by mid-2011; and,
- March 13, 2009 – The BC government announces it will invest $187 million over four years to upgrade the Sierra Yoyo Desan Road improving access to the Horn River Basin and increasing current traffic loads.
On top of the massive amount of money pouring into the region, The BC government announced a new royalty plan to provide additional incentives to increase drilling in BC. Premier Campbell has done a great job in managing incentives to attract investment into BC’s oil and gas sector and encourage exploration and development.
Now in addition to the hungry American market, BC will have its first Liquid Natural Gas (“LNG”) export terminal near Kitimat open for operations in 2013 and open new export markets for natural gas in Japan, South Korea and of course China.
Investing in Horn River is a strategic long term investment that generates economic benefits in today’s downturn while preparing for the long term energy needs of the future. We always premise that natural gas is not the only solution but plays the most important and viable role in a overal solution that includes all other alternative energy sources. Natural gas is proven, available, and easily converted into existing facilities and vehicles. Expanded and distributed wisely, natural gas will serve as a evolutionary bridge towards a hydrogen energy system. In the meantime the two key energy sources will be Alberta Oil sands, and British Columbia natural gas and Fort Nelson will be to BC, what Fort McMurray is to Alberta.
