While public attention centers on the Arctic, a dramaticdemonstration is under way of the ability of Canada’s near north todeliver new natural gas supplies on a large scale.

Murphy Oil Co., lifting a veil of secrecy that has hung over ahot drilling play for a year, told the National Energy Board itexpects to achieve production of up to 310 MMcf/d in northeasternBritish Columbia this year.

The Calgary subsidiary of its namesake in Arkansas disclosedthat its best find in the area to date, Ladyfern is just part ofan aggressive development campaign in a prolific area within easyreach of markets. Even if the program only turns out to be anaverage or “mean-case” performer, Murphy projects production of 172MMcf/d this year.

The Ladyfern discovery well – a site titled a-097-H about 80miles north of Fort St. John, is capable of sustained production ata rate of about 100 MMcf/d, Murphy told the NEB. The output isbeing held down to about three-fifths of potential by limitedequipment and an associated production restriction enforced by theB.C. Oil and Gas Commission. The company said it will installbetter equipment and apply for an increase in the “allowable” orpermitted flows. Unlike prospects in Alaska and the MackenzieDelta-Beaufort Sea region, the Ladyfern play is within immediatereach as a discovery on a technical rather than a geographicalfrontier.

The discovery is a new pool found in complex geology in awell-established production area, using advanced methods such as 3Dseismic. The region is a long day’s drive northwest of Calgary, andis within reach of both the Westcoast and TransCanada-Nova pipelinesystems in B.C. and Alberta. Ladyfern appears to rank among thebest wells ever drilled by the Canadian industry, as potentially amatch for the stellar discovery that a group led by Chevron CanadaResources put into production last year at Fort Liard in thesouthwestern Northwest Territories.

Plans that Murphy outlined to the NEB call for 17 wells,including eight at Ladyfern and nine in a nearby location calledFoxglove-Chinchaga. Five wells in the program are “step-outexploration” probes into the same geological feature as theLadyfern discovery well.

Murphy disclosed its drilling results and plans — afterkeeping them secret for a year in order to secure more property inthe area without attracting rivals — to support an application tothe NEB for permission to build a new pipeline. The proposalhighlights the immediate value of the northern B.C. discoverycompared to arctic and offshore targets that have becomefashionable over the past year of rising gas prices and projectionsthat markets will stay tight.

Murphy’s plan calls for connecting its discovery area to anestablished, under-employed processing plant called Hamburgoperated by a drilling partner, Apache Canada Ltd. The projectinvolves laying 11 miles of pipeline for C$4.2 million (US$3million). The NEB has been drawn into the case, with hearingsscheduled to start Feb. 15 in Calgary, because the line crosses theB.C-Alberta boundary.

While Murphy and Apache have recorded the most spectacularresults to date, they are not the only companies in on the northernB.C. drilling play. Others active in the area include AlbertaEnergy Co. and Ricks Nova Scotia Co., a Canadian arm ofOklahoma-based Ricks Exploration Inc. The NEB in late Decembergave Ricks approval to build a pipeline from its target zone in theLadyfern area into Alberta, provided the company does as well asexpected with a drilling program this winter. Murphy, meanwhile,cleared a hurdle on the eve of hearings on its proposal.

Gordon Jaremko, Calgary

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