Resource World Magazine

A P R I L / M A Y 2 0 1 9 www.resourceworld.com 57 Petronas drills for gas in Northeast British Columbia The oil patch has long been known for its cyclical existence, bouncing from economic highs to depression-like lows, but Malaysian giant Petronas Energy [PGAS-KL] plans to change all that – in Northeast British Columbia at least. After a two-year absence, Petronas Energy Canada Ltd. is back drilling in NEBC to solidify its share of natural gas for the $40-billion LNG Canada export project. Petronas owns about 900,000 gross acres of mineral rights with more than 60 trillion cubic feet of reserves and contingent resources in the North Montney. But officials of the Petronas subsidiary Progress Energy Canada Ltd., which Petronas acquired in 2012, say they won't be striving to match the 30 rigs running continuously in the region. Instead, they will strive for a more measured approach that will ensure 40 years of steady development, production vice-president, Dennis Lawrence, told a session of the Canadian Society for Unconventional Resources late last year. The company launched one rig in October 2018 and will add a second this year, building to 4-6 rigs and some hydraulic fracturing sites for the next few decades as it hopes to develop 60 trillion cubic feet of recoverable resources. "That's better for our business," he told the session, according to a quote in the Daily Oil Bulletin. "It allows us to optimize, it allows us to plan properly, and it is better, quite frankly, for the communities in which we operate." As one of the largest natural gas producers in the country, Petronas Canada is focused on responsibly producing the cleaner-burning fuel for decades to come. "The company continues to explore ways to bring its substantial supply of natural gas, an important part of the planet's transition to a low carbon economy, to multiple markets in order to meet growing global consumption and expectations," the company said in a statement to Resource World Magazine. The company secured significant transportation commitments last year includ- ing capacity on the North Montney Mainline Extension starting later in 2019, and firm transportation delivery service on the Nova Gas Transmission Ltd. system at Empress starting in 2020. "In addition, Petronas is thrilled to have the opportunity to play a role in reducing emissions globally beginning in 2023, at which time the company will begin delivering natural gas to the LNG Canada project in support of Petronas' 25 percent interest in the project," the company said. Petronas at one time had its own LNG project in BC, Pacific NorthWest LNG, but cancelled it in the spring of 2017. Petronas Canada is planning a "slow and steady" increase in activity over the next three years," said the company. The company began work on one new eight-well pad and two new gas plants in the Town area of the Montney play late last year and expects to increase the number of rigs running from two in 2019 to six in 2022. "The number of wells drilled will continue to be based on a number of fac- tors, including natural gas prices, pipeline availability and market commitments." Progress Energy hasn't drilled in Northeast BC since March 2016 but reportedly has more than 300 undrilled well permits dating back to 2010. n Also, the Alberta Investment Management Corporation made a strategic investment in Pieridae on behalf of its client's 5 million common shares at $2 each. The project is unusual among more than two dozen North American LNG projects in that one company, Uniper, has committed to taking half its capacity – 5 million tonnes a year (mtpa) for 20 years. Plus, the German government has ruled it is eligible for US $4.5 billion in loan guarantees. The guarantees depend on Uniper delivering 1.5 mtpa to the Gate terminal in the Netherlands and shipping by pipeline to Germany for domestic consumption. As it stands, the Goldboro facility may be the first LNG plant to go operational in Canada, and its East Coast location puts it four to five days closer to the coveted European markets than shipments from the US Gulf Coast. European Union countries imported 5.1 billion cubic feet of LNG per day in 2017, primarily from Russia and Algeria, a steady increase over the past three years, and Pieridae is banking on the notion that the EU buyers want to diversify away from Russia. The project is so large it would both transform the local labour market and have significant social impli - cations, with Brad Smith, Executive Director of the Mainland Nova Scotia Building Trades Council, telling ConstructConnect the numerous trades workers who have left the province to seek work elsewhere might return home. At any given time, 15% of the province's trades are working out of province. Smith's organization has eight training cen - tres where workers are currently prepping for the Goldboro job. "A project of this scope and size will be very attrac- tive to the trades who will likely choose to stay home rather than travel to projects out west as they have tra- ditionally done in the past," he said. Goldboro is positive news for a Canadian oil patch reeling from a four-year downturn and facing a new setback – Enbridge's postponement of its $9 billion Line 3 pipeline replacement until late 2020 due to permitting delays in Minnesota in the face of envi - ronmental groups' opposition. According to the Royal Bank of Canada's Current Account newsletter, that's a blow to Canadian producers who were hoping the pipeline expansion would partially alleviate their well- known bottleneck and pricing problems by adding about 375,000 barrels a day of export capacity to the United States. But Goldboro, coupled with the Shell-led $40 billion LNG Canada project on the west coast, expected to be operational by 2024, should give industry observers something positive to think about. n

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