The Alberta Energy and Utilities Board (EUB) has always prodded companies to develop sour-gas reserves located near cities as quickly as possible.

That policy is about to collide head-on next month with the concerns of some 250,000 Calgarians. For more than 20 years, the EUB has tried to co-ordinate the recovery of the natural sour-gas deposits on Calgary’s eastern outskirts to avoid conflicts with the fast-expanding city.

The effort has resulted in significant improvements in communication among various provincial, municipal and industry groups involved in sour gas issues, and in better consultation with the public, says a report by Ted Brown, an urban and regional planning consultant.

But, Brown’s report notes: “The one area where little success has been achieved is that relating to the accelerated production of the sour gas reserves.” In fact, no new sour gas wells have been drilled in the areas of potential conflict within and adjacent to Calgary for more than a decade.

This is the case despite an industry-landowner land use and resource development agreement – approved by the EUB in 2001 – to speed up depletion of sour gas reserves next to the city.

It’s under this agreement that Compton Petroleum Corp. has applied to drill six critical sour gas wells from one well lease located just over a kilometre from the southeast city limits. “Critical” means the wells are expected to contain nearly 37-per-cent poisonous hydrogen sulphide or sour gas and, because they’re so close, any leak or blowout would potentially affect 250,000 residents.

Compton says the new wells will recover the remaining sour gas in the area in about 15 years, compared with more than 50 years if the wells aren’t drilled.

The EUB will have a tough time saying ‘No’ to the company’s rationale, since it is in accordance with what the regulatory agency’s policy has been for more than two decades.

Another factor is bound to come into play at the hearing, scheduled to start March 30 at Lynnwood Ranch Hall east of Okotoks.

A senior-level provincial task force, which includes the deputy ministers of five government departments, has been formed to find some solutions to the persistent problem of tapping sour gas next to populated areas.

The task force, co-chaired by EUB chairman Neil McCrank and Alberta Energy Deputy Minister Ken Smith, intends to use the Calgary area as a case study to try some pilot programs aimed at improving co-ordination of sour gas development and surface development, and reducing potential conflicts.

Next month’s hearing could well provide the task force with its first opportunity to propose something that works.

STREAMLINED PROCESS

Oil and gas companies in B.C. can look forward to a streamlined regulatory regime for exploring and drilling on agricultural lands.

B.C.’s Oil and Gas Commission (OGC) and the province’s Agricultural Land Commission have signed a “delegation” agreement that transfers some of the agricultural commission’s powers to the OGC.

Instead of companies submitting applications for oil and gas development on lands reserved for agriculture to the agricultural commission for a decision, the OGC will now handle most of these applications. The OGC says the benefits of the new arrangement for oil and gas firms include enhancing the OGC’s efficient “one-window” approach to regulation and delivery of services.

Benefits for landowners include improving on-site inspections, investigations and enforcement by OGC staff.

The agreement, effective April 1, applies only in the Peace River Regional District and the Northern Rockies Regional District.

THE ABCs OF CBM

The Alberta government will hold information meetings in rural communities on the province’s plans for coalbed-methane development, starting next month.

Energy Minister Murray Smith says as the province continues to develop “natural gas in coal seams,” the government wants to hear from landowners who’ve had CBM wells drilled in their regions.

Natural gas in coal seams, by the way, is the government’s new ‘newspeak’ for coalbed methane or CBM. It’s a way of distancing CBM development in Alberta from a history of landowner and environmental problems that have plagued CBM development in Wyoming’s Powder River Basin and other parts of the U.S.

Information sessions are scheduled in Pincher Creek, Strathmore, Stettler, Rocky Mountain House, Wetaskiwin and Barrhead in late March and into April.

The government will also consult with a multi-stakeholder advisory committee that includes landowners, agricultural producers, the energy industry and environmental groups.

The Alberta Geological Survey estimates there could be as much as 500 trillion cubic feet of natural gas in the province’s coal deposits, although how much can be economically recovered is anybody’s guess.

In B.C., where the resource is estimated at 89 trillion cubic feet, Premier Gordon Campbell’s Liberals have implemented a regulatory and royalty regime to encourage more exploratory CBM drilling and pilot production projects.

Make no mistake: CBM will play an increasingly vital role in both provinces’ energy supplies. Now would be a good time to learn more about it.

OIL VS. TREES

B.C. may be jumping with oil and gas activity, but it had better not forget about the trees. That’s the message from David Baxter, executive director of the Urban Futures Institute.

Revenue sales of oil and gas must increase 100 per cent to offset a 10-per-cent decline in the forest industry, Baxter told the Outlook 2004 conference in Vancouver earlier this month.

The forest sector powers 42 per cent of the provincial economy and has much greater economic clout than oil and gas development, he noted.

B.C. earned a record $1.26 billion in oil and gas royalties in the first six months of the 2003-2004 fiscal year.

In comparison, the annual timber harvest sustains a $17.7-billion forest sector – or $12,000 for every B.C. household, according to the Interior Lumber Manufacturers’ Association.

In these heady days of B.C.’s oil and gas rush, it’s important to not miss the forest for the pumpjack.

REACHING FOREIGN FIELDS

The Canadian oilpatch continues to extend its reach into foreign lands. Here’s a sampler of some current activities:

* GeoGlobal Resources Inc. of Calgary and its joint venture partners have signed contracts to share production from two onshore oil and gas development blocks in the Cambay Basin, located in Gujarat province in northwest India.

* Vancouver-based Tanganyika Oil Company Ltd. says it plans an aggressive program this year of seismic, exploratory drilling and well workovers in the Oudeah oilfield in northeast Syria, and in the 1,898-square-kilometre West Gharib development block near the Gulf of Suez in Egypt.

* Kroes Energy Inc., a junior producer in Calgary, says its 45-per-cent owned joint venture in Ukraine, Kashtan Petroleum Ltd., plans to drill three development wells, one exploration well and complete six workovers on shut-in wells this year as part of its oilfield redevelopment project.

* First Calgary Petroleums Ltd. announced the completion of its fifth successful natural gas well in the Ledjmet development block in Algeria in North Africa.

* Calgary-based Calvalley Petroleum Inc. says it has the go-ahead from its joint venture partners and the Republic of Yemen’s oil and minerals ministry to start an 11-well exploration and development program on Block 9 in Yemen.

* Talisman Energy Norge AS, a wholly owned subsidiary of Talisman Energy Inc., has been awarded two new exploration licences in the Norwegian North Sea and has also bought ConocoPhillips’ 35-per-cent interest in two additional licences on Norway’s continental shelf. Talisman is building exploration and development core areas around its 13-year-old Gyda gas field, which the company acquired last May for $90 million from BP.

* PetroKazakhstan Inc. plans to spend a minimum $15.6 million on exploration, including seismic and drilling, to start developing its North Nurali, Nurali and Asksai fields in the Republic of Kazakhstan.