Shell Canada announced that it has acquired 58,000 acres of land in northeastern British Columbia for $85 million, providing exploration and development prospects in the deep basin area. The company said the purchase doubles its holdings of tight sands, or basin-centered, gas resources in Canada, and illustrates the need to focus more on unconventional plays because of maturing conventional resources.

“Shell Canada sees the foothills portion of the deep basin as an exciting opportunity to exploit its core technical strengths in deep structured plays,” said Ian Kilgour, senior vice president of exploration and production for the company. “This additional land doubles our basin-centered gas landholdings and gives us a platform to step up our exploration and development efforts in this area. Building a strong position in the deep basin is in line with Shell’s strategy to expand its Western Canada gas production.”

Shell Canada spokesman Jeff Mann said the purchase is an important part of the company’s strategy to grow its western Canadian gas business. “Demand for natural gas continues to increase and conventional supplies of natural gas in western Canada have matured so if we want to grow our business we’ve got to find other sources of gas.

“We’re just at the front end of this. We’ve only drilled four wells. It’s a new entry for us. But there are a lot of people after basin-centered gas now up in British Columbia. The economics around it are pretty clear. With high gas prices, it has made it more economically feasible.”

The lands that were acquired provide Shell Canada with a 100% interest in 12 parcels. In 2004, the company established an initial land position to the east of this area in Alberta and drilled four wells. Drilling on the newly acquired lands is planned for next winter.

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