BC's Natural Gas GOLD RUSH...
 

As many are aware, natural gas royalties represent a considerable portion of BC's ~$13 billion in cumulative surpluses over the past 5 years and every annualized $1 increase represents an additional roughly $300 million, IIRC, in revenue to provincial coffers.

Last year natural gas was around $6 - $7 per tcf, while the benchmark price of natural gas on the New York Mercantile Exchange on Friday was $9.73 per thousand cubic feet.

As an aside, natural gas is also Alberta's major source of energy royalties from what I understand.

Additionally, last year BC earned ~$1.1 billion in revenue from these energy exploration rights.

Such future inflows to government coffers would also perhaps permit transit/highway infrastructure projects to come on line sooner rather than later.

So imagine what my thoughts were when I read this Globe and Mail article this morning:

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Gas players gear up for B.C. rush

Huge discoveries in northeast ignite 'massive land grab' for drilling rights

DAVID EBNER

March 3, 2008

CALGARY -- The remote and rugged northern fringe of British Columbia is set for a frantic land grab by natural gas explorers, following months of speculation and intensified by last week's announcement of what could rank among the largest gas discoveries in Canadian history.

Located in northeastern B.C., with the key area centred on the Horn River Basin, very little was known about the play until last Thursday, when Houston-based EOG Resources Inc. said it might have reserves of six trillion cubic feet - the same as Mackenzie Delta, Northwest Territories, and a figure that would increase Canada's total proved reserves by roughly 10 per cent.

EnCana Corp. of Calgary - which claims the initial discovery of Horn River's potential - and partner Apache Corp. of Houston may also have 6 trillion cubic feet of gas, Apache said in early February.

EnCana, Apache, EOG, as well as Nexen Inc. of Calgary, are the four major firms on the play and hold exploration rights for more than 600,000 acres. In late March and again in late April, the B.C. government announces the results of the next two auctions of exploration rights in the province, with roughly another 200,000 acres up for grabs in the Horn River region.

"Everyone's looking at bidding at land up there, it goes without saying," said Dale Shwed, chief executive officer of Crew Energy Inc., a Calgary junior explorer that has a small position in the region.

Industry's focus on Horn River has increased steadily in the past year, most recently capped by the $67-million put down at B.C.'s February auction of exploration rights for land in the area. "I suspect the EOG announcement will push it through the roof," said Michael Harris, vice-president of investor relations at Nexen.

Major advances in technology are helping drive the frenzy, including horizontal drilling and subsurface fracturing of the complex and difficult shale rock in which the natural gas in Horn River is trapped. Unlike conventional pools, economically extracting gas from shale rock has been, until just recently, next to impossible.

"This is setting up to be a massive land grab equivalent to that of the oil sands binge in Alberta during late 2005 and early 2006," analyst Robert Fitzmartyn of FirstEnergy Capital said in a report last Friday. "Land sales are likely to remain frantic over the coming months."
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http://www.theglobeandmail.com/servl...itishColumbia/

yah i grew up in the NE

most people down here have no idea what goes on up there

there are billions and billions being invested up there

but Alberta gets all the headlines

Natural Gas Bonanza For B.C.

Scott Simpson, Vancouver Sun

Published: Friday, March 28, 2008

The rush for natural gas in northern British Columbia reached a fever pitch in the 2007-2008 fiscal year that closes on Monday, Energy Minister Richard Neufeld announced.

B.C. took in $152 million in bonus bids in March to lift gas and oil rights sale revenue to more than $1.2 billion - almost twice the previous record for single year sales, Neufeld said in a news release this week.

"These exceptional land rights sales show British Columbia is a top jurisdiction for oil and gas investment," said Neufeld in the release. "Our success is the result of first-rate resource potential and strong support for continued industry growth. We have increased our natural gas reserves, expanded infrastructure and attracted new interest to B.C. that will benefit the entire province for decades to come."

The previous record, set in 2003-2004, was $625.7 million.

This year¹s amount also saw a near-doubling in the per-hectare value of bids - $1,863 per hectare compared to $984 in 2006-2007.

Eighty-one parcels covering 89,752 hectares were offered in the March 26, 2008 sale, and bids were accepted on 81 parcels for an average price of $1,694 per hectare, the government said.

Key parcels in the March sale were three drilling licenses located in the Horn River Basin area about 45 kilometres north of Fort Nelson, with bid totals of $22.9 million, $15.8 million and $12.4 million for the trio.

Horn River Basin has immense potential for shale gas development, although the technology to tap gas in deposits of this type is still in development - gas prices must be relatively high in order for them to remain economic.

Natural gas resources in B.C. are increasingly in demand among Canadian drillers, especially in light of the decline in conventional gas resources in Alberta.

British Columbia, by contrast, is relatively unexplored and is believed to contain vast gas reserves - although many of the deposits are in areas such as Horn River which present greater technical challenges for drillers, who may have to pay up to 10 times as much per well compared to conventional gas plays in Alberta.

http://www.canada.com/vancouversun/n...020468&k=69171

With BC's treasury receiving $1.2 billion from gas and oil land sales for the past fiscal year, I was certainly surprised to see that the figure surpassed Alberta's $710 million figure.

http://www.canada.com/edmontonjourna...1629ff9803&p=2

this big news, even the Wall Street Journal ran an article today about it.
British Columbia Is Becoming A Major Player in Natural Gas
By Ben Casselman
Word Count: 531 | Companies Featured in This Article: Devon Energy, Apache, EnCana
British Columbia, long an also-ran in Canada's energy boom, is emerging as one of North America's hottest areas for natural-gas exploration.

One factor: An accommodating government in a time when other countries and regions are angling for a bigger slice of energy-production profits.

Thursday, British Columbia said it reaped 152 million Canadian dollars (US$149.2 million) on the sale of drilling rights on 81 parcels of land covering more than 220,000 acres. It was the latest in a series of major sales, which already had brought in more than C$1 billion in the fiscal year ending Monday, outpacing the previous annual ...

http://online.wsj.com/article/SB1206...googlenews_wsj


And here is a excerpt from National Post.

Alberta's energy crown threatened
B.C. and Saskatchewan raking in huge sums from the sale of crude and natural gas exploration rights
DAVID EBNER

March 28, 2008

CALGARY -- British Columbia and Saskatchewan are on the verge of a huge oil and natural gas exploration boom as companies pour hundreds of millions of dollars into land rights, shifting their focus away from the established energy capital of Alberta

http://www.theglobeandmail.com/servl...Story/Business

Does this mean America will "liberate" us one day?

Great. Now if our government has the balls that the Newfoundland one does, we could actually benefit from this (or get screwed over like Alberta if it doesn't).

I think you guys are seeing the benefits already. Our government screwed us out of millions by raising the rates. I believe that the drop in revenue from land sales and the decrease in taxes collected from companies and less employment will outnumber any incremental revenue we receive from royalties.

^^ Considering today's energy prices and the billions that such companies make in terms of profit...we can get the huge royalties and the large number of jobs at the same time. Newfoundland will be a "have" province within less than 2 years, all due to that recent deal they struck up.

Another Day.... Another Big Pay Day:

Crown Oil and Gas Land Rights...

For Calendar Year 2008 to Date:

BC: $751 million

Alberta: $352 milllion

That's extraordinary!

Sask is no slouch either:

Crown land sales in 2008: $462 million so far

http://www.er.gov.sk.ca/adx/aspx/adx...SALE+GRAPH.pdf

^Do you mean 2007 or 2008?

Oops, 2008 sorry.

good news - FSJ i hear is booming - but its a real crap hole to live in

Go GORDO Go! ;)

But are we just whoring out our land to foreign investors? Or are BC companies doing any of the exploration/extraction??

A couple of interesting tidbits today...

A junior oil/gas firm was the target of a large takeover bid by Shell today and the $5.9 billion pricetag as well as the reasons behind purchase (magnitude of the northeast BC Montney tight natural gas play) are interesting:

http://canadianpress.google.com/arti...MED89Uxu0xyQIg

On top of that, an interesting article about offshore oil and gas. I know, I know... but BC produced light crude would be more environmentally friendly than oil from the dirty tar sands.

http://www.canada.com/vancouversun/n...bf5347&k=18623

oil is all basically foreign - and mostly all british

petro canada is one of the only tru canadian ones

but the industry hires a lot of local small companies to do the work so local businesses do benefit and all that

IC

What about in Russia? Is it the same sort of deal? Or do they have more domestic companies doing the work? IE Gazprom

The only British company I can think of is (was) BP, but they have merged with Amoco (U.S.).

There are plenty of Canadian companies involved in exploration in BC, some large, some small, and some in between. Some of the big ones are:

Encana
Talisman
Suncor
CNRL
Nexen