Don’t expect natural gas exploration companies to give up the hunt for coalbed methane (CBM) in British Columbia.
Canada’s fledgling CBM industry is still very much interested in exploring for and developing the natural gas in coal seams in B.C., says the head of the industry’s national association.
People shouldn’t think otherwise just because no companies bid on two CBM exploration properties recently offered for sale near Fernie in the province’s southeast, says Mike Gatens, chairman of the Canadian Society for Unconventional Gas.
Politicians in Montana at the state and federal level had vigorously opposed CBM development in the Elk Valley across the border until a full-scale environmental impact study was done. The Fernie town council and Kalispell Chamber of Commerce also had asked for any CBM drilling to be put on hold.
But Gatens points out that several other oil and gas leases offered in the recent provincial auction also didn’t sell. “Unclaimed exploration rights are a common occurrence in all parts of the country,” he says.
Gatens says at this early stage of evaluating the CBM resource in B.C., it’s hard to predict which, if any, of the province’s coal seams containing the clean-burning methane gas will ever be developed into commercial operations.
But he says that Canada’s unconventional gas industry “remains committed to exploring and developing unconventional gas resources, including coalbed gas, in a considered, environmentally responsible manner – in B.C. and elsewhere in the country.”
My sources tell me that Chevron Canada Resources originally asked the B.C. government to put up the two CBM parcels for auction.
But then in May, the company’s parent firm, ChevronTexaco Corp., decided to sell most of its assets in Western Canada, including 13 producing fields, to Acclaim Energy Trust and Enerplus Resources Fund for approximately $800 million.
The sale was part of the U.S.-based firm’s decision to focus on its more significant Canadian assets, including the Athabasca Oil Sands Project and Mackenzie Delta gas.
Compared with the large return expected from these projects, hunting for coalbed methane in B.C. is a high-risk and expensive proposition – and strong public opposition only makes it more so.
A Breath of Fresh Air Wind-generated power has gotten a big lift in B.C., despite BC Hydro’s skepticism about the energy source. Sea Breeze Energy Inc. has cleared a crucial regulatory hurdle in its plan to build a $700-million wind-power project, about 35 kilometres west of Port Hardy on the northern tip of Vancouver Island.
The B.C. government awarded the small Victoria-based company an environmental permit for its 450-megawatt Knob Hill wind farm, to include 150 wind turbines.
Sea Breeze’s proposed project is the first wind farm ever assessed under B.C.’s environmental assessment legislation, as well as federal environmental assessment law.
But despite getting the green light, Sea Breeze will probably have to sell its wind power to U.S. customers rather than those in B.C.
BC Hydro recently rejected a proposal from the company when the Crown corporation was seeking bids from private-sector energy suppliers for new electricity projects on Vancouver Island.
Hydro, in opting instead for proposals that use natural gas or biomass (such as wood waste) to generate electricity, says the problem is that it’s not always windy.
But that hasn’t stopped Alberta from developing more than 200 megawatts of wind power, or Quebec from announcing plans for a $1.9-billion project producing 1,000 MW of wind-generated electricity.
BC Hydro needs to realize that adding more wind power should be part of its effort to build a healthy, more diversified energy portfolio.
True, the wind doesn’t always blow. But rivers, on which Hydro is greatly dependent to generate hydroelectricity, are also unpredictable and they don’t always run full out. And unlike increasingly costly natural gas, the price of wind never changes.
Wary Neighbours The door has been slammed on Startech Energy Inc., a Calgary-based junior energy firm, due to a decision by the George W. Bush administration.
The fallout threatens to put a crimp in plans by other Alberta companies to expand natural gas exploration in the U.S. Rocky Mountains.
According to reports from Montana, the U.S. Bureau of Land Management has decided to stop permit work on three controversial gas wells that Startech Energy wanted to drill in the Blindhorse Outstanding Natural Area, on the eastern slopes of the Rocky Mountain Front 120 kilometres northwest of Great Falls, Mont.
The regulatory bureau now says it will do a thorough study of the entire 160-kilometre stretch of the Front before deciding whether to allow any oil and gas exploration there. The plan essentially halts drilling on the Rocky Mountain Front for at least the next four years.
Startech’s three wells were opposed by 49,000 of the 50,000 people who commented in the last year as part of an environmental review of the proposed drilling plans, according to the U.S.-based Wilderness Society.
EnCana, meanwhile, says it intends to drill about 450 wells next year in Colorado’s Piceance Basin, including about 150 new wells in the northern part of the region.
But EnCana’s operations in the U.S. Rockies are also coming under much closer public scrutiny, especially after the company was recently fined $371,000 by Colorado energy regulators in connection with a gas seep that leaked from a well into a creek near Silt, Colo.
Doug Jones, of EnCana’s southern Rockies business unit that includes Colorado and Utah, said last month that the company intends to address the public’s concerns about drilling impacts and “do better and better as time goes by.”
It had better. Otherwise, doors to other oil and gas opportunities in the U.S. Rockies could quickly start to close.
(Mark Lowey can be reached at mark@businessedge.ca)
