THE FULL MONTNEY
The Montney Formation holds great potential for Canada’s natural gas market, particularly its LNG export potential. But amid low domestic prices, coupled with waning LNG demand, is it doomed to fall short?
THERE’S A LOT RIDING ON
the Montney Formation. The liquidsrich shale gas play is already a fairly large player in Canada’s natural gas market, producing around 3.5 billion cubic feet of natural gas per day (bcf/d), or 25 percent of natural gas production in the Western Canadian Sedimentary Basin (WCSB). But it has the potential to be much larger. A recent joint study by the National Energy Board, Alberta Energy Regulator, the B.C. Oil and Gas Commission and the B.C. ministry of natural gas found that the Montney holds about 449 trillion cubic feet (tcf) of marketable gas and nearly 15 billion barrels of marketable natural gas liquids. Analysts at Wood Mackenzie predicted in 2013 that Montney production could surpass the 5 bcf/d mark in 2018, while production elsewhere in the WCSB is set to decline.
Major players like Shell Canada, ExxonMobil and Progress Energy have bought sprawling plots of land in the Montney in the hopes that new LNG export facilities on the West Coast would eventually provide access to higher international prices for their product. But actually building those facilities – the B.C. government website lists 21 proposals – has been slow amid regulatory delays and worries over a glut of new supply from the U.S., Russia and Australia. In January, Shell became the first project to get a B.C. government permit, but it has yet to take a final investment decision (FID). The feedstock of all LNG projects proposed in B.C. amounts to a an almost comical total of 41.9 bcf/d in capacity, so clearly only a few – if any – will ever be built. Still, the most likely projects to reach an FID will be sourced almost entirely by Montney gas.
MEANWHILE, PRODUCERS ARE
expecting low prices for an extended period as a flood of natural gas makes its way westward, from the Marcellus Formation in the northeastern U.S. to the U.S. Midwest. Production in the