B.C.'s natural gas riches ensure a bright future despite energy woes

Editorial
Vancouver Sun
May 31, 2008

It's hard to find good news stories about energy during these days of the $100 fill-up, peak oil panic and carbon taxes. But here's a tale of buried treasure in British Columbia's backyard.

Exploration in the remote northeast region of the province has revealed vast reserves of natural gas -- more than enough to make B.C. self-sufficient for decades. Production and investment could double or triple in the next five to 10 years, says EnCana, Canada's largest energy company and a pioneer in opening up the area where many players are now bidding for rights to drill and develop the land. Companies scrambling for a piece of the action include Talisman, Apache, Devon, Canadian Natural Resources, Quicksilver, Suncor and Husky -- even ExxonMobile has staked a claim.

EnCana executives told The Vancouver Sun editorial board this week that B.C. can become a real powerhouse in North American natural gas. Two key plays are Cutbank Ridge, from which EnCana produced 234 million cubic feet a day in 2007; and Greater Sierra at the northern extremity of the province near Fort Nelson, which yielded 211 million cubic feet a day. Estimates of reserves in the Horn River Basin area of Greater Sierra alone exceed 50 trillion cubic feet.

The gas rush has driven land prices from as little as $800 a hectare when EnCana first scouted the area five years ago to $25,000 a hectare today. The auction for leases in the region this month set a record of $441 million.

This money goes directly into the B.C. treasury. That's on top of the $1.2 billion in revenue the provincial government has budgeted from natural gas royalties.

With the forest industry moribund, oil and gas is the largest commercial contributor to government coffers. Fortunately, the Liberal government seems well aware of the industry's importance and has resisted opposition calls to terminate successful programs, such as the net profit royalty program, which recognizes that development of unconventional resources has higher operating costs and expensive technology, and infrastructure programs that ensure access to these remote regions.

In fact, EnCana said the government has, by and large, put in place the right policies to maintain a vibrant industry. Even the regulator, the Oil and Gas Commission, wins praise for efficiency -- something of an irony since it was established by a New Democratic Party government, and remains one of few NDP initiatives the Liberals didn't expunge.

B.C.'s natural gas industry is vital not only to provide government with revenue, but to guarantee energy security. With nuclear power still in the distant future, coal-fired energy relegated to the past and conventional oil becoming increasingly uncertain, natural gas gives us assurance that there will be light, heat and fuel far into the future.