Northeastern British Columbia (BC) will remain a Canadian sweet spot for natural gas and liquid byproducts supply development in 2017, triggering construction of new processing and storage facilities along the Alaska Highway.
Veresen Inc. and AltaGas Ltd. finished the old year on a high note by announcing C$315-335 million (US$236-251 million) in field service additions for shale production from the Montney formation.
Veresen will build liquid byproducts storage and handling hubs for C$195 million (US$146 million) to take care of growing output by the Cutbank Ridge Partnership of Encana Corp. and Mitsubishi Corp.
AltaGas completed obtaining regulatory approval for C$120-140 million (US$90-105 million) in new processing plant and compressor capacity required for accelerating production by Painted Pony Petroleum Ltd.
Both projects are 2017 annual steps in multi-year field development schemes that use horizontal drilling and hydraulic fracturing to tap shale and tight geological zones rated as comparable to the richest deposits in the United States.
The Cutbank program is harvesting 9,300 identified drilling locations on 1,660 square kilometers (639 square miles) of Encana Montney leases, including 5,900 spots where the gas has high content of condensate or natural gasoline.
Cutbank production targets are 50,000 b/d of liquids by 2019 and 1.2 Bcf of gas by 2019. The 2017 drilling program is expected to yield an average 85 b/d of liquids per million cubic feet of new gas flows, according to Encana investor presentations.
Painted Pony, a Montney specialist that holds 517 square kilometers (200 square miles) of the formation, plans a 50% capital budget increase in 2017 to C$319 million (US$239 million).
The ambitious program calls for company output to double to liquids and gas equivalent to 48,000 b/d. Another addition is planned for the allied AltaGas processing service as production continues to grow after 2017.
At up to 300 meters (1,000), the Montney formation can be four times as thick as the famously rich Marcellus in the United States and enables planning for stacked clusters of wells, say Painted Pony investor presentations. Liquids content averages 60 bbl per Mcf of gas.
None of the current Montney activity relies on the stalled lineup of 20 proposals for liquefied natural gas export terminals on the northern Pacific Coast. Project delays are expected to reduce overall BC drilling totals next year. The Montney gas left after extracting its liquids is replacing depleting output by aging Alberta wells tapping conventional reserves.
While condensate stands out as a prime drilling target in high demand for use as pipeline flow thinner for growing oil sands bitumen production, propane is emerging as a BC development prize as well.
AltaGas ended 2016 by completing environmental applications for a proposed propane export terminal at Prince Rupert. The project, forecast to cost C$450-500 million (US$338-375 million) would export 1.2 million tonnes per year (40,000 b/d) collected from an array of BC wells and delivered to the coast by rail.
AltaGas president David Harris, ending 2016 on an upbeat note, predicted in a statement that “2017 will be a significant growth year” for field services in northeastern BC.