The two-year-old Liberal government in British Columbia, setting out to keep a promise to Canadian natural gas producers, has gone to bat for the latest effort to connect some of their hottest drilling targets to markets.

The B.C. Ministry of Energy and Mines threw its weight behind a transportation project by the top Canadian producer, Encana Corp. The ministry urged the National Energy Board to approve the proposed Ekwan Pipeline.

The project, a modest addition to the pipeline grid which is forecast to achieve a significant increase in supplies, has become the subject of full-blown hearings before the NEB. The case centres on environmental and Aboriginal sensitivities that have made the northern B.C. wilderness a difficult place for the industry for generations. The Liberal provincial government, amplifying on a theme that its predecessor New Democratic Party socialist regime started to sound in its last stages, urged the NEB to consider a bigger picture than local effects of gas field activity.

The B.C. energy ministry fired off a letter to the NEB pointing out “the oil and gas industry has become a very significant contributor to the economy of the province, generating in excess of C$1 billion (US$740 million) in direct Crown (provincial government) revenue annually. These revenues are needed to fund vital services such as health care and education.”

After reviewing the pipeline project with EnCana, the B.C. ministry predicted “the facilities will provide a significant volume of new supply” at a time when “spikes and generally increasing natural gas prices in North America would appear to be the result of too much demand chasing too little supply.”

The Ekwan proposal calls for a C$55-million (US$40-million), 50-mile leg of 24-inch-diametre pipeline between developing gas fields in the Fort Nelson area of B.C. and TransCanada PipeLines Ltd.’s Nova grid in northwestern Alberta. EnCana Gas Marketing has booked space on the new connection for an initial 100 MMcf/d, with the amount to increase by stages to 300 MMcf/d.

Technical earth sciences evidence compiled for EnCana says it is drilling up a geological target known as the Jean Marie formation, which harbors as much as 5 Tcf on the basis of current knowledge. The information is limited and future projections will depend on results achieved across 11,800 square miles drilling prospects where the industry has barely scraped the surface by drilling an average of one exploration well per 13 square miles. On 5,600 square miles of the region, there has been too little exploration even to sketch rough geological maps.

EnCana holds 3,525 square miles or 30% of the Jean Marie, drilled 77 wells into it in 2002 and plans 150 this year. And EnCana is far from the only Canadian gas heavyweight stepping out into the northern B.C. region to be connected by the proposed Ekwan Pipeline. The drillers include a household name for discoveries and development since the 1960s, J.C. Anderson. He and a team of close associates are back in action with Anderson Energy Ltd., a fresh start on building an independent after Devon Energy bought their Anderson Exploration to leap into the front ranks of Canadian gas drillers and producers.

The newly-reincarnated Anderson told the NEB it has taken out “significant exploration land holdings” in the Ekwan area, and with a partner plans “an extensive drilling program” there over the next two years. The Anderson group urged the board to consider the region a large enough supply development prospect to make sure the new pipeline is an open-access carrier, operated at arms-length from producers competing for dominant positions in the area and capable of accepting traffic from a range of new wells and processing plants liable to be built by a variety of owners.

The province, meanwhile, took action on a second front rated as critical by western Canadian gas producers by also going to bat for them with Aboriginal groups which are powerful in northern B.C. Energy Minister Richard Neufeld pledged about C$1.9 million (US$1.4 million) in “seed-money” contributions to eight communities organized as the Treaty 8 First Nations, for local employment training and business capacity-building partnerships with industry.

The developing relationship includes an agency titled the CAPP-Treaty 8 Forum, for building communication, planning and economic benefits-sharing bridges between the Canadian Association of Petroleum Producers, Aboriginal communities and provincial authorities.

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