A natural gas processing agreement announced Monday by Encana Corp. and Keyera Corp. is highlighting large-scale production developing in the Montney formation straddling northern Alberta and British Columbia (BC).
For an estimated C$705 million ($564 million), the Calgary companies plan to build capacity for up to 170 MMcf/d of natural gas and 33,000 b/d of liquid byproducts by 2021.
The arrangement delegates the processing side of Encana field activity to Keyera as a midstream specialist. Keyera receives a 20-year service contract and buys a partially completed Encana start on building the processing network for C$39 million ($31.2 million).
Titled Pipestone, the network has a central position near Grande Prairie in the Alberta share of the 130,000-square kilometer (50,180-square mile) Montney. A first phase of the facilities is forecast to pump out 14,000 b/d of gasoline-like condensate by the end of this year.
A 280 MMcf/d sour gas facility, designed to serve Montney Shale producers working in the Pipestone region of the Western Canadian Sedimentary Basin already is underway by a unit of SemGroup Corp.
In the Montney, Encana and Keyera are tapping shale resources portrayed in astronomical numbers by the BC Ministry of Natural Gas Development, BC Oil and Gas Commission, Alberta Energy Regulator and National Energy Board.
Encana has touted the potential of the Montney before, calling it one of the "top-five" natural gas fields on the planet and even suggesting it could eventually compete with the Marcellus Shale.
A recent appraisal by earth-sciences arms of the provincial and federal agencies rated the marketable volumes awaiting Montney drilling at 449 Tcf of natural gas, 14.5 billion bbl of liquid byproducts and 1.1 billion bbl of oil.
The report noted that although knowledge of the formation dates back to the 1950s, "Montney siltstones remained undeveloped until 2005, when advances in horizontal drilling and multi-stage hydraulic fracturing made it possible to economically develop this extensive, unconventional siltstone resource."
After swiftly growing into a range of 2 Bcf/d, Montney production continues to rise. The rich formation propels pipeline expansions by rival supply collection grids of TransCanada Corp. and Enbridge Inc., continuing efforts to start liquefied natural gas exports from BC's Pacific coast, and construction of a northern liquid byproducts tanker terminal at Prince Rupert.
"The Montney's marketable unconventional gas resource is one of the largest in the world," says the earth-sciences appraisal. "It is expected that Montney gas production will continue to increase and grow its share of Canadian production."