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?

Alberta Oil - - REPORT ON NATURAL GAS - By Jesse Sny­der

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

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