A story in today’s Vancouver Sun says the National Energy Board believes, natural gas reserves in British Columbia may be large enough to overcome declining gas production in Alberta in the coming decades.

It noted gas exploration and drilling companies, notably EnCana, have been methodically taking positions in unconventional areas around Fort Nelson and Dawson Creek for a few years.

However this year, as the potential of the areas became more evident, competition for drilling rights in the Montney region near Dawson Creek and Horn River Basin near Fort Nelson have fuelled record setting oil and gas rights sales.

Canada’s natural gas production has been in slow decline, year over year for most of this decade, because conventional gas reserves in the Western Canadian Sedimentary Basin, are slowly running dry.
Those reserves account for 98 per cent of annual Canadian gas production for domestic and export markets, and have been central to Alberta’s dominance as a gas producer on North American markets.

However, improved technology to extract gas from unconventional shale and “tight” underground formations has shifted the focus to the possibility of increased production from Northeast BC.

Now the NEB has taken stock of that optimism and, notwithstanding the volatility of natural gas prices on North American trading markets, concluded that B.C. may have a promising future as a major gas producer.

Right now gas is trading at around $8 US per unit on North American markets, and the NEB estimates that’s the floor price needed to make drilling in the Horn and Montney cost-effective.