Devon Canada Corp. has high hopes for shale gas in northeastern British Columbia
Gas megaproject methods are migrating into B.C. shale, setting the stage for the next big boom
Like the bitumen belt, the shale gas frontier belongs largely to firms with deep pockets. Just to become eligible to apply for benefits of B.C.’s oil sands-like net profit royalty regime for Horn River deposits, a minimum of $50 million must be spent to establish that a drilling rights spread is suitable for a big project and that the sponsor can pay for it.
Northern B.C.’s service and supply firms, which are mostly small by energy industry standards, have banded together to ensure they obtain pieces of the action. As gas development grows, “we’re seeing a move away from the little guy,” reports Scott Gordon, project manager in the Fort St. John headquarters of 180-company Energy Services B.C. The trade association’s creation was inspired by studies estimating that up to two-thirds of industry spending and 37,000 potential local jobs are going to larger Alberta or international contractors expanding into B.C.
Regional initiatives range from considering formation of local supply and service co-operatives to enlisting government moral support. The province is helping to encourage the industry to make voluntary B.C. adaptations of contracting practices such as breaking up big orders or jobs into smaller pieces, Gordon reports.
“We don’t want favoritism,” adds Steve Thorlakson, general manager of Fort St. John-based Surerus Pipeline Inc. and a former mayor of the northeast B.C. industrial capital. “We just want the opportunity to bid.” His firm has highlighted the strength of B.C. talent by winning pipeline construction assignments in the Edmonton area in competition against far larger Alberta contractors.
The industry is studded with signs of intentions to make B.C. shale gas happen big-time. Heavy expenditures of money and planning effort are in progress.
The province sold $2.66 billion in drilling rights last year, more than double the old record of $1 billion set in 2007 and a six-fold jump from the previous 10-year annual average of $434 million. Auctions continue at a brisk pace.
Participants in the land rush launched an industry first to smooth the development path. Firms that are competing for hot properties, and not project ownership partners, formed an alliance for collective work on community relations, aboriginal consultation, regulatory affairs, and local training, employment and business development. The 11-company Horn River Producers Group is a gas industry who’s-who: Apache Canada, ConocoPhillips Canada, Devon Canada, EnCana, EOG Resources, a B.C. partnership of Imperial Oil and ExxonMobil Canada, Nexen, Pengrowth, Petro-Canada (now Suncor), Quicksilver Resources and Stone Mountain Resources.
“The real attraction of all this from the consumer and investment side is that there is no geological risk,” Snyder says. “With every well you drill, the chance of success for getting gas is very high.”
As in Texas, the B.C. version of shale gas technology is evolving into larger and increasingly economic production systems. Prototype wells drilled by pilot operations began with horizontal legs 750 meters (2,450 feet) long and four formation-fracturing injections. Each of the mini-earthquakes uses 1,500 to 3,000 cubic meters of water and 150 to 250 tonnes of sand driven into the shale by chain gangs of compressors with horsepower measured in tens of thousands. In the latest trials, the scale has about doubled. “Everybody’s playing with length. We probably could go a lot farther,” Snyder says.
While shale gas manufacturing lacks the drama of traditional fortune hunting for scattered gas pools, the Devon geologist says the new technique has its own inspiring side. “The idea that there are trillions of cubic feet of gas out there to be had is exciting.” Estimates of recoverable Horn River reserves run to 60-120 trillion cubic feet, a colossal supply at least 50 per cent greater than Alberta’s entire remaining conventional gas inventory.
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