The Horn River Basin (HRB) Shale — in the northeastern corner of British Columbia (BC) snug up against the Northwest Territories border and not far west of the Alberta line — is quite a bit more remote than other North American plays. There’s also not a lot of processing facilities in the area, and it’s far from being at a pipeline crossroads.

That would suggest the economics of producing from the Horn River might be more difficult than in other shale areas. Ed Kallio, Ziff Energy Group’s natural gas consulting manager, put it this way at a recent LDC Forum in Chicago: Horn River is “a beautiful play, but it’s in the wrong place,” in an area with little infrastructure and “basis differentials to contend with. It will not be drilled as quickly as the Haynesville or Marcellus, for instance. It will get to 2-3 Bcf/d,” but it will take some work (see Daily GPI, Sept. 17).

That’s true to some extent, acknowledged Rob Spitzer, vice president of exploration for Apache Canada Ltd., but it doesn’t mean leaseholds in the basin don’t have great value. Besides his Apache job, Spitzer is also chairman of the Horn River Basin Producers Group (HRBPG), which is comprised of the 11 chief producers engaged in basin operations. He characterized the group as one whose members trade best drilling/production practices among themselves. The group coordinates communication and acts as liaison with local citizens (including native tribes), the government and other interests.

The most obvious market hurdles for HRB gas to clear are higher transport costs and a general lack of processing/takeaway infrastructure, Spitzer said. However, it also has some advantages, he added: there are no expiring lease issues such as are often encountered in the U.S.; the shale permeability is excellent; and it’s a “very high-quality resource in place.”

Obviously the severe climate of northeast BC plays a role in drilling and production not faced by milder-weather plays such as the Haynesville, Barnett and Eagle Ford in Louisiana and Texas. But that has become less of an issue than three years ago, Spitzer said. At that time producers could conduct winter-only drilling because there were no roads into the area; now a road network allows year-round operations.

Spitzer said there is already enough infrastructure in place to handle current HRB volumes, but obviously more will be needed very shortly because of anticipated drilling growth. Westcoast’s 40-year-old Fort Nelson Gas Plant, with 1 Bcf/d of capacity, is the primary existing processing facility for Horn River gas. Westcoast parent Spectra Energy also is building the Fort Nelson North Processing Facility at Cabin Lake, with start-up expected in the second quarter of 2012, said spokeswoman Lise-Ann Jackson. It will have inlet capacity of 250 MMcf/d, she said.

HRBPG members also anticipate Encana’s construction of the Cabin Gas Plant. Spitzer said he understands that facility will be completed sometime next year; however, Encana representatives could not be reached for an update of the plant’s status.

There is already a connecting pipe between HRB and Fort Nelson, and Westcoast is in the process of expanding its transmission facilities in the area, Jackson said. In addition, TransCanada is seeking permission from the National Energy Board to make an early start on building its proposed Horn River Pipeline in order to generate the most native employment possible (see Daily GPI, Oct. 11). The 155-km (97-mile) line connecting HRB to TransCanada’s NOVA grid in Alberta would be capable of carrying 1 Bcf/d or more and has a service target date of May 1, 2012.

The liquefied natural gas export facility planned in Kitimat, BC (Apache is a 51% owner along with EOG Resources) is still in the feasibility study stage, but it would be a primary demand source for HRB gas when if is completed, with TransCanada’s Horn River Pipeline leading to markets in Eastern Canada along with the Midwest and West Coast in the U.S., would be the other, Spitzer said.

HRBPG is separate from operations in the Montney Shale, which is about 250 miles south of the Horn River play, Spitzer said. There is “some overlap, but a different mix of companies.” However, “in Horn River we’ve done some things that are being emulated in Montney,” and there have been trade fairs involving representatives of both plays, he said.

Besides Apache Canada, other HRBPG members are ConocoPhillips, Devon, Encana, EOG, Imperial Oil/ExxonMobil Canada, Nexen, Quicksilver, Pengrowth, Suncor and Stone Mountain. More information on the group is available at

Shale gas surfed the wave of overall price strength during the first four days of this past week, and the 13 plays in NGI‘s Shale Price Indices (SPI) recorded gains ranging from 16 cents to 34 cents from Friday (Nov. 12) through last Friday. The Midcontinent shales saw all of the biggest increases, and except for a lagging Granite Wash were near parity with the Gulf Coast pricing. Perhaps most surprising, in averaging $3.90 the Midcontinent’s Fayetteville Shale play forged ahead of all others except for the two Marcellus regions in the Northeast.

The three Rockies shales (Green River, Piceance and Uinta basins) continued to trail the rest of the pack in absolute pricing, but they did manage to move up further than Haynesville-North Louisiana, which came in last (along with Eagle Ford in South Texas) with a 16-cent uptick. Despite its relatively modest recent performance, Haynesville-North Louisiana still averaged 2 cents above its Haynesville-East Texas counterpart after having been 7 cents ahead a week earlier.