Montney Crew

While analyzing the current tendencies in the industry, most of the oil and gas experts unite in at least one forecast—that the impressive sustainable development of the Montney Play area will only continue in the foreseeable future. Situated in northeastern British Columbia and extending into northwestern Alberta, the region’s vast potential stretches out around Dawson Creek and Fort St. John.

The Ministry of Energy and Mines of British Columbia has recently revised the Montney Play trend. It officially stated the trend now covers approximately 2.6 million hectares (10,196 km2) in the Peace region, with the main producing area in the South Peace region (Dawson Creek/Fort St John area). Production in the North Montney and South Montney is also growing exponentially. In 2011, the Montney Play has accounted for 89 percent of BC land sale bonus totals and brought $201 million to the province.

With the lowest price below $2 per million Btu, the natural gas market has likely hit bottom this spring, though it should rebound shortly.  The Goldman Sachs Group Inc. assures it will likely happen in the 2012 fall, given the coordinated efforts being undertaken by producers to avoid overproduction and the expectations to get a hot summer and “back-to-normal” winter.

Against these raised hopes, industry pundits are thoughtfully advising investors to take a fresh look at the gas plays which are the most promising in terms of their potential. In the recent GlobalData report, a London-based provider of business intelligence, investors’ attention has been drawn to the Canadian Montney Play as a huge resource base, securing tremendous reserves of unconventional hydrocarbons.

Located in Western Canadian, the Montney Play occupies up to 2,961 square miles on the border of two provinces, Alberta and British Columbia, and allows each of them to take its own piece of a revenue pie from reserves, currently measured at 35 to 250Tcf of original gas in place.

According to data compiled by the Ministry of Energy, Mines and Petroleum Resources of BC, the Montney Play region brings in almost half of the Ministry’s proceeds received by the government from PNG rights sales. In 2011, the Alberta Montney Play made it feasible for the first time in history to record $3 billion in land sales.

The Montney Play was discovered quite some time ago, but only with the recent cutting-edge technological advancements has it moved to the forefront. Horizontal drilling and hydraulic fracturing have opened up these reserves which were previously ignored by producers as too costly or difficult to extract.

At this stage, the Montney “crew”comprises about 30 companies who are successfully operating in the region with the EnCana Corporation as the acclaimed captain and biggest producer of natural gas. Given the lingering pressure on gas prices, EnCana has been making an effort to “recalibrate the market.” In actual terms, this means a reduction of dry gas production, which, according to the company’s 2012 first quarter report, was approximately 3.27Bcf/d. Instead, EnCana plans a switch to liquids with a view to ramping up extraction from the current 29,000bbls/d to 80,000bbls/d by 2015.