Northeastern B.C. towns see natural gas drilling recovery
Increasingly empty industrial yards around the northeastern B.C. city of Fort St. John are a welcome sign for Jennifer Moore.
Moore, a regional economic development officer, says the return of parked natural gas drilling rigs and related equipment to the field shows that a recovery is underway for one of Canada’s biggest new energy plays.
Fort St. John sits atop the Montney, a natural gas-bearing formation that straddles the B.C.-Alberta border. Like the oilsands hub of Fort McMurray, its fortunes are closely tied to energy prices. And with natural gas prices weakened by rising U.S. supplies, Fort St. John and neighbouring communities have witnessed a grinding twoyear slowdown.
“It’s been a little scary here,” said Moore, who works for the North Peace Economic Development Commission. “As you drove around the community industrial areas, you saw a lot of iron parked in yards, and that’s not a good thing. Pipe, equipment, trucks ... the majority was parked in town.”
Industry players say that while gas prices are still weak, rich finds in the Montney and the prospect of new pipelines are helping to revive exploration.
According to the online trade publication BOE Report, 335 wells have targeted the Montney in the first quarter of this year. That’s a hopeful sign after drilling fell to 746 wells for all of 2016 from a peak of 1,321 in 2014.
The northeastern B.C. unemployment rate dropped to 6.5 per cent in March from 10.5 per cent in December. At the height of the boom in 2014, it registered as less than 3.5 per cent.
“People are feeling more optimistic,” Moore said. “Cautiously optimistic.”
Energy executives say the Montney’s prolific production, unlocked with horizontal drilling and hydraulic fracturing technology, makes it the most profitable natural gas play in Canada. It provides about onequarter of Canada’s current natural gas output.
In a recent report, Desjardins Capital Markets said the Montney has proven its quality, with growth now limited mainly by insufficient pipeline space to carry away its growing bounty.
But plans are being filed to bring more Montney gas to market. They include TransCanada’s mainline pipeline system from Alberta to Ontario and its new North Montney Mainline through northeastern B.C., as well as through an expansion of the rival Alliance Pipeline that runs from the Montney region to Chicago.