Royal Dutch Shell plc has dropped plans to develop coalbed methane in British Columbia (BC) following the provincial government’s decision to ban natural gas and oil exploration in the Klappan, an aboriginal area in the northern part of the province.
BC authorities said they plan to issue no more drilling leases in the Sacred Headwaters of the Klappan, a Tahlta First Nation community, which has led to an eight-year fight to prevent energy development.
“Close relations with aboriginal communities are important to our many business opportunities in British Columbia, and we are pleased to have found common ground on our petroleum and natural gas tenure in the Klappan,” Shell Canada President Lorraine Mitchelmore said. “We now focus on growth opportunities with better commercial and geological prospects in northeast British Columbia.”
Shell agreed to relinquish its leases in the region and plans to use an estimated US$20.3 million in royalty credits to build a water recycling plant at its Gundy natural gas field in the province. The oil major already had spent an estimated $30 million for explore and develop the area and three exploration wells had been drilled.
Shell’s drilling plans, which were announced in 2004, led the Skeena Watershed Conservation Coalition and other groups to voice concerns about damaging salmon-bearing rivers. In late 2008 BC officials imposed a development moratorium that was set to expire Tuesday (Dec. 18) (see Daily GPI, Dec. 30, 2008). The oil major instead said it would focus its BC development on big shale opportunities, including in the gassy Montney and liquids-rich Duvernay. Shell also is progressing a plan with Asian partners to build the largest liquefied natural gas export terminal in North America.
Sacred Headwaters “is a place of tremendous cultural, spiritual, historic and social importance,” Tahltan Central Council President Annita McPhee. “Our people do not want to see it developed, and we look forward to working with BC on achieving permanent protection of the Klappan.”
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