In what has to be one of the most bizarre and misleading press releases I have ever seen, today the BC government issued a report that claimed This potential supply can support development and LNG export operations for more than 150 years.. This is in reference to the Montney gas/condensate play in British Columbia. Lets take a closer look at this 150 year number. As noted by Kate Webb at Metro News in Vancouver, the 150 year number comes from domestic rather than global consumption numbers. That is, it is obtained by taking the hypothetical resource volume in BC and dividing it by the current Canadian annual volume consumption of natural gas. In other words, it tells us how many years it would last Canadians for their domestic needs assuming no increase or decrease in national consumption rates. But heres the problem... Almost by definition, LNG is for EXPORT not DOMESTIC consumption. So lets do a Reality Check: Every year BP undertakes a Statistical review of World Energy (the 2013 report and info is available here bp/en/global/corporate/about-bp/statistical-review-of-world-energy-2013.html ) As noted by BP, GLOBAL natural gas proven reserves would supply current global production rates for 55.7 years. Canada contained (at the end of 2012) 1.1% of global reserves. Doubling BCs (NOT EVEN Canadas proven reserves) would have a very small effect on global resource lifetime. In other words, the 150 year number, and in particular, the statement in the report below that B.C. is very confident that the natural gas supply in the province can support long-term operations for 150 years or more. is utter nonsense and, in my opinion, irresponsible hype that is misleading British Columbians. There is no doubt that the Montney Formation is an important natural resource for our province. This is largely because the shale gas formation contains condensates (liquids) in addition to the natural gas. These can be sold in addition to the natural gas. This is quite different from the dry gas fields in the Horn River shales near Fort Nelson which require a North American natural gas price of around $5.00/Million BTU to be economical. With natural gas trading at about $3.38/Million BTU in North America, the Horn River play is not economical. The analysis above is validated by yesterdays news release from Canadian natural gas giant Encana noting that it was going to lay off 20% of its staff in North America as well as dramatically reduce its shareholder dividend (see globalnews.ca/news/946574/encana-cutting-20-of-workforce/). This does not bode well at all for Encanas interests in the Horn River play region of BC. Instead of chasing the falling fossil fuel economy of yesterday, BC should be heading towwards a prosperous future by developing its clean tech sector - the sector involved in the generation, transmission, storage and end use of renewable energy.
Posted on: Thu, 07 Nov 2013 07:13:32 +0000