Back in June, Keith Kohl of Energy and Capital called the Horn River basin “The best-kept secret in natural gas discoveries”. In his latest article “How Canada is Suffering from Peak Natural Gas” he goes into detail about how Canada’s powerhouse energy province Alberta has been recording declining production in conventional gas since 2001 and that no amount of conventional drilling in Alberta is going to reverse this trend.
But despite the concerning decline of Alberta’s natural gas production, Mr. Kohl once again reminds his readers of the “best kept secret in natural gas”… British Columbia’s Horn River basin. In his October 13th article he states;
There’s but one province that has managed to increase natural gas production year after year: British Columbia. Back in 2000, BC made up just 12% of Canada’s overall production. Since then, that share has grown to over 18%.
The Horn River Basin isn’t news to us. In fact, I still believe this unconventional shale play is one of the best-kept secrets in natural gas discoveries. It’s a trend too costly to ignore.
Please don’t get me wrong: Alberta is will continue to be a powerhouse for Canadian energy. But I’ve found, more often than not, it’s worth it to stay ahead of the curve. Once BC gets a sufficient infrastructure in place (a few pipeline stocks come to mind), they’re going to give Alberta a run for their money.
Some forecasts predict that British Columbia will surpass Alberta in total natural gas production by 2020 – perhaps sooner. Analyst Michael Mazar of BMO Capital Markets has stated; The Horn River Basin “has the potential to render those plays obsolete.” (See HRN: “Will the Horn River Basin make Alberta the next “have-not” province?”)
Infrastructure is moving forward at a fast pace in BC and production estimates continue to grow. Fort Nelson is fast becoming the “next Fort McMurray” in Canada. Overall, Canada has a great opportunity to leverage increased domestic natural gas resources to lower carbon emissions by increasing the amount of natural gas used in the country’s overall energy mix.
Energy and Capital: “How Canada is Suffering from Peak Natural Gas” by Keith Kohl
