EnCana Corp. has obtained, on schedule, approval from the National Energy board for a 51-mile, 24-inch diameter pipeline connection from a hot drilling and development region around Fort Nelson, BC to the northwest mainline of the Nova grid in Alberta.

The C$55 million Ekwan Pipeline to be built this winter will tap Encana’s Jean Marie drilling play, a new priority target in a vast BC gas hunting ground known as the Greater Sierra, where EnCana alone has 3,525 square miles of drilling rights. Drilling applications for northern British Columbia have jumped 75% this year over last, and the total is expected to approach or exceed 1,100 for all of 2003.

So far, a marketing subsidiary of EnCana is committed to using about 75% of the new line’s 418 MMcf/d capacity by 2006. At least some of the remaining capacity may be contracted to other companies drilling in the region

The success of the approval process was seen by Canadian producers as a signal they can expect to maintain access to this always-touchy and often-contested aboriginal country of northeastern British Columbia. The application was a delicate exercise in demonstrating it is possible to clear increasingly high hurdles known as “cultural” in the industry.

EnCana demonstrated that the gas production industry can make peace with aboriginal powers-that-be in the region by engineering benefits agreements with three First Nations: Fort Nelson, Dene Tha’ and Prophet River. Details were kept confidential.

When disclosed, such deals normally cover jobs, training, assignments for local contractors and joint-venture arrangements in some cases. EnCana also made a start on economic-co-operation with the Metis Council of British Columbia, representing often impoverished descendants of intermarriage between the original northern inhabitants and early traders and settlers.

Prophet River and Fort Nelson belong to an eight-tribe confederation, Treaty 8 First Nations, which on Sept. 30 set a 60-day deadline for the federal and BC governments to begin negotiating resource revenue and jurisdiction sharing. The alternatives range from demonstrations and road blocks to lawsuits aimed at enforcing court decisions upholding BC aboriginal claims.

The latest ruling, from the Supreme Court of Canada, declared that the BC Metis are a distinct aboriginal group with constitutional rights such as hunting. Only two weeks after the ruling the Kelly Lake Metis group in the Dawson Creek area, an emerging center of gas activity in the wilderness around Mile One of the Alaska Highway, spread word that it is preparing legal action to seek a follow-up decision asserting its rights to traditional lands in a way that gives it a say in resource development.

In light of EnCana’s success and statements by Treaty 8 and Metis leaders that their goal is to participate in development rather than stop it, gas producer executives at an industry and community conference in Dawson Creek described the political environment as encouraging. The aboriginal requests were interpreted as invitations to start laying out a regulatory framework that makes access to resource targets a matter of smooth routine.

Canadian industry and government leaders have been pressing for a reliable resource-access code in BC as a matter of top priority since completion of the Alliance Pipeline between the region and Chicago three years ago. The Ekwan project was a reminder that the rest of the Canadian pipeline grid is also affected by the supply hunt in BC.

Although much of the supporting geological, engineering and reserves data remains confidential due to hot competition for drilling targets, accelerating activity in the region satisfied the NEB that it can be confident the Ekwan Pipeline will be well used. The project grew out of successes by an extensive, continuing drilling play named the Jean Marie after a prolific geological formation.

EnCana’s geological consultants told the NEB that the Jean Marie has potential to yield five Tcf of gas on the basis of current knowledge alone. The Jean Marie is a separate target from another element of EnCana’s BC program known as Cutbank Ridge, a drilling play the company expects to yield more than four Tcf of gas from about 810 square miles of resource rights it has acquired in provincial land sales and deals with other firms.

In evidence submitted to the NEB, EnCana reported it has to date tapped only about 12% of its Jean Marie holdings and planned 150 wells into them in 2003, plus future drilling at a rate of about 100 wells per year. The EnCana programs are only the latest and largest additions to long-running exploration and development plays by a lineup of producers ranging from home-grown Canadian Natural Resources to Calgary-based arms of American gas hunters such as Anadarko Petroleum and Burlington Resources.

The BC Oil and Gas Commission, set up in Fort Saint John five years ago in anticipation of a northern drilling rush, reported it is happening. So far in 2003 compared to the first nine months of last year, the number of northern BC well applications has jumped 75% to 653.

In the previous decade, the annual B.C. well count ran as low as 158 and the average was in the 400 range. The number of drilling rigs currently active in BC stands at 59, double the 29 at work this time last year. The count increases rapidly when winter arrives, freezing marshy terrain and allowing heavy equipment to move through the bush. The regulatory apparatus has also speeded up, thanks partly to pioneering exercises in collaboration with the aboriginal population as well as creation of the commission and associated administrative procedures.

A decade ago, well applications took an average 42 working days to approve. This year, the wait is down to an average of about 17 days.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.