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Horn River Producers Step Up for Fort Nelson Capacity

Seven Horn River Basin producers have committed to 760 MMcf/d of gathering and processing capacity on an expansion of Spectra Energy Corp. facilities in Fort Nelson, British Columbia, the company said Thursday. The expansion could accommodate up to 830 MMcf/d of incremental gas from the burgeoning Horn River.

"Our plan involves staged expansions of our existing Fort Nelson area infrastructure to meet the scale, scope and timing of our customers' needs," said Spectra CEO Greg Ebel.

The expansion program would begin this year and continue into 2012 and would include the reactivation of existing processing capacity at the Fort Nelson Gas Plant, looping and reconfiguration of area gathering and compression, as well as the addition of processing capacity at Spectra's Cabin Lake compressor station. Discussions with other interested parties are continuing and construction is subject to regulatory and other approvals, Spectra said.

"Horn River production is going to grow very rapidly," EnCana Corp.'s Mike Graham, president of the company's Canadian Foothills division, predicted during a December conference call with financial analysts. A shale gas partnership between EnCana and Apache Canada alone expects to tap Horn River for more than 100 MMcf/d by the end of 2009. TransCanada Corp. last month completed a binding open season for firm transportation service to carry 378 MMcf/d of shale gas from the Horn River to its Alberta System (see Daily GPI, Feb. 27).

EnCana discovered the Horn River play in 2003. Ramping up in the remote region "will require substantial road and pipeline installation before full-scale development can occur," Graham said last June (see Daily GPI, June 17, 2008). "Advances in our multi-stage fracturing and horizontal drilling are expected to improve the economics of the play in the months and years ahead."

The Horn River Basin Shale Gas Producers Group was a driving force behind an annual record C$2.7 billion (US$2.3 billion) in sales of BC government-owned gas rights during 2008. The shale gas formation is a Devonian-era reef about 180 meters (590 feet) thick, underlying 6,200 square kilometers (2,400 square miles) of northern bush and muskeg swamps at a depth of 2,700 meters (8,830 feet), EnCana said.

In its disclosures to BC's environment watchdog, the Horn River consortium calculated its namesake geological structure's endowment of gas in place at an astronomical 600 Tcf. With current technology, the group estimated 10-30% of the natural deposit can be economically produced (see Daily GPI, Jan. 12). The group includes Apache Canada, Devon Canada, EOG Resources Canada, Nexen Inc., Quicksilver, Stone Mountain Resources and a partnership of Imperial Oil with its majority owner ExxonMobil.

Spectra has operated in the Fort Nelson area for more than 40 years. The Fort Nelson Gas Plant is the largest sour gas processing plant in North America and is the only facility currently processing Horn River gas.

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