Asia-Pacific markets beckon for western producers
Obstacles abound, but fossil fuel exports would help sustain a B.C. boom
Photo by Ryan Girard
Edinburgh-based energy consultancy firm Wood Mackenzie predicts natural gas production from the Western Canadian Sedimentary Basin will increase from 14.4 billion cubic feet per day (bcfd) in 2010 to 16.6 bcfd in 2033 despite continued declines in conventional natural gas production from the basin. You can take these forecasts with a heavy grain of salt – there are a lot of them out there – but if Wood Mackenzie’s crystal ball proves to be correct, it’s great news for British Columbia, which will backstop the production growth through the development of its Horn River and Montney shale and tight gas plays.
The interest in developing B.C.’s huge unconventional gas reserves, with industry mainstays like Encana Corp., Talisman Energy Inc., Nexen Inc. and Imperial Oil Ltd. looking to score big here, could come in handy for the province.
The B.C. economy is not robust these days. In its Provincial Report – 2011, the Conference Board of Canada said the B.C. economy is in a “lull” and isn’t experiencing the kind of growth Alberta and Saskatchewan are enjoying. The 2010 Winter Olympics and infrastructure stimulus funding allowed the B.C. economy to grow more than four per cent last year. But the Olympics are over and the stimulus funding is running out. Making matters worse, the province’s forestry sector is hurting as it waits for the U.S. housing market to recover.
Sustained oil and gas activity could reverse troubling economic trends on the West Coast. However, the catch is Old Faithful – the United States market – doesn’t need much Canadian natural gas thanks to prolific production from its own shale plays. So, new destinations for B.C. hydrocarbons must be found. That was the message Paul Sullivan, global director of liquefied natural gas (LNG) for engineering firm WorleyParsons, imparted on attendees at June’s 2011 Oil and Gas Expo and Conference in Calgary. “If you want to enhance the value of your gas, you’ll have to send it somewhere else,” Sullivan said.
The oil and gas industry recognizes this and the Pacific Rim is clearly its market of choice. The thought of supplying this energy-starved region is leading to a rush of industry-sponsored projects on B.C.’s coast. Proposed LNG terminals – like the Kitimat LNG project – would ship chilled natural gas plumbed from the depths of B.C.’s shale plays to countries like Japan, South Korea and Taiwan. On the oil side, Enbridge Inc.’s Northern Gateway pipeline and Kinder Morgan Canada’s TMX expansion seek to send Canadian crude to the Far East through steel conduits terminating at B.C. ports.
None of these projects have been approved yet. But if this wave of activity comes – and the industry is banking on it – it could put B.C. back on the path to prosperity.