BC’s shale gas is more important then Alberta’s oil sands

Worker holds up some "oil sand" in Alberta

Not only is BC’s shale gas production going to surpass Alberta’s total natural gas production one day,  it is going to become more important then Alberta’s oil sands in meeting the energy needs of North America while reducing carbon emissions. Let’s look at how we got here and where we are going…

Alberta’s Premier Ed Stelmach is still sore from the beat down BC’s Premier Gordon Campbell is giving him in the battle to encourage exploration and development companies to drill for natural gas. While Stelmach started his money grab and moved forward in raising royalty rates against the advise and warnings of industry leaders, Campbell quietly lowered royalty rates and committed to investing into BC’s energy sector. Exploration and development companies started to commit budgets to drilling programs outside Alberta.

In April 2008, Apache Corp and Encana Corp. let the cat out of the bag announcing the results of what was called a “world class” discovery in BC’s Horn River basin. The land rush was on and companies started to buy up land leases in BC setting record sales for the Province that resulted in a $2.2 billion boost to their treasury. Interest in BC’s Horn River basin and Montney basin was growing and drilling activity was running high.

Then the energy sector saw the global economic downturn take energy prices with it. Exploration companies started rethinking their long term strategy and how to best position for their companies for the next cycle. The majority of industry players have determined that there are only two areas to focus on; Alberta’s oil sands or BC’s shale gas. With most of the best land already spoken for in the oil sands, more companies are looking towards Horn River and Montney as the future for exploration and development.

Today, the Horn River basin is one of only three active natural gas basins in North America. Only 37% of Alberta’s rigs are active in that Province. Exploration and development companies – big and small -  are focused on BC where the future looks promising and some of those drilling resources are moving into BC. Grande Prairie, Alberta, traditionally services the northwest of Alberta. According to Don Herring, President of the Canadian Association of Oilwell Drilling Contractors “We had 98 rigs running in B.C. [as of February] out of 131, which is a 75 per cent utilization”.

The fact is that there is over 400 trillion cubic feet of shale gas in BC’s Horn River and Montney basins. That is a massive amount of gas and the awareness of the important role this clean resource can play in the future of energy evolution in North America is just starting to grow. The next phase will be to increase the usage of natural gas in the transportation system in Canada and the USA. It is the fact that natural gas is a clean energy source comparative to the oil sands that makes it more important.

By no means is the Alberta oil sands going to stop producing oil, nor are Americans (and others) going to stop buying it. The fact is however, that shale gas can play a key role in reducing the overall carbon emissions generated from automobiles (AT&T USA is converting 8000 fleet vehicles to natural gas – the single largest commitment to alternative fuels by an American corporation). And in the end that is really the objective. While the oil sands continues to invest in carbon capture and other technologies to improve their overall carbon footprint, shale gas in BC should be moved up as the most important source of abundant clean energy in Canada.

It is always necessary to remind everyone that there is no one single solution. The key is to continually evolve technology and move forward in practical steps to meet energy needs while reducing carbon emissions. Natural gas is the most practical next step in moving towards this goal.