Liard Basin a reminder of Canada’s great energy potential.
Cattaneo, FP1
A new estimate of the natural gas resource held in the Liard basin straddling the British Columbia, Yukon and Northwest Territories borders should be reason for celebration — with 219 trillion cubic feet of marketable natural gas, it’s one of the largest shale gas deposits available in the world.
In better times, such an eye- popping number would have triggered stock appreciation, pumped governments to invite development and promoted competition between corporate players eager to get in on the action.
But with the pile of nixed and challenged energy projects getting bigger, and natural gas prices languishing, the Liard’s supersized resource estimate mostly serves as a reminder that Canada has great resource potential — but don’t count on it any time soon.
The reasons behind the country’s struggles to turn resources into exports are consistent: regulatory delays, opposition from aboriginal and environmental organizations, climate change worries, political mishandling and, ultimately, changing market conditions.
According to the study, made public by the National Energy Board Wednesday and done in collaboration with the British Columbia Oil and Gas Commission, the Yukon Geological Survey, the Northwest Territories Geological Survey and the British Columbia Ministry of Natural Gas Development, the Liard contains the world’s ninth- largest gas accumulation, and Canada’s second largest after the Montney, shared by Alberta and B.C.
The basin collected sediments from about 540 million years ago to about 65 million years ago, and some turned into shale that generated natural gas. Most of the gas is in British Columbia, with 167 trillion cubic feet, the NWT landed 44 and the Yukon eight.
Canada’s total natural gas usage in 2014 was 3.2 trillion cubic feet, which means the Liard could satisfy more than 68 years of national consumption.
San Ramon, Calif.- based Chevron Corp., and Perth, Australia- based Woodside Energy, have a handful of wells that are already producing gas that is transported by pipeline to the southern part of B.C. and the U. S. Pacific Northwest. The partners plan to use the resource to feed the proposed Kitimat LNG project on Canada’s West Coast if and when it’s built.
Mike Johnson, technical leader for hydrocarbon resources at the NEB, said the Liard is very prolific, has existing pipeline connections, and could see big development if gas prices increase.
“We don’t know much about the economics,” he said. “It’s more remote, so it might cost more to develop the resource, but the wells are really, really big.”
Today, natural gas in Western Canada is depressed and there is no upside in sight.
It’s been pushed out in many historic markets by shale gas produced in the United States. Proposals to build liquefaction facilities on the B.C. coast to enable exports to Asia are stuck in delays, while competing jurisdictions are jumping ahead.
The $ 36- billion Pacific North West LNG project proposed by Malaysia’s Petronas and its partners is due for a recommendation next week on whether it can move forward by federal Environment Minister Catherine McKenna. But it is expected to face further delay after Ottawa introduced new greenhouse- gas emissions considerations, fuelling proponents’ frustration.
Last month, Royal Dutch Shell PLC delayed a decision on construction of the LNG Canada project until the end of the year, and AltaGas Ltd. put on hold the Douglas Channel project.
The lineup of cancelled or delayed projects was already long. It includes the Mackenzie gas pipeline, the Northern Gateway oil pipeline, the Keystone XL oil pipeline and the Alaska Highway gas pipeline.
Bob McLeod, premier of the Northwest Territories, said oil and gas companies “packed up and left” from the North after oil prices collapsed.
In a speech to the Arctic Oil and Gas Symposium in Calgary, McLeod said his region is greatly affected by climate change, which fuels forest fires and hinders ice roads.
But he said the North also wants energy development because it needs jobs.
After losing Mackenzie gas, drilling in the Beaufort Sea and oil and gas activity in the central Mackenzie Valley, the NWT is preparing for the next oil and gas upturn by building infrastructure, reforming land tenure and helping with aboriginal land claim settlements, he said.
“If you have the resources then we expect that at some point the energy will be required,” said McLeod, who remains hopeful the Mackenzie pipeline will eventually be built. “If you look at the forecasts, they still see that even with the conversion to renewable and alternatives form of energy, there will still be a requirement for oil and gas.”