Potential of Montney Formation’s future in LNG questioned in Alberta Oil report

FORT ST. JOHN, B.C. — Alberta Oil has published a new article focusing on the Montney Formation.

It questioned how long it can meet its soaring LNG development potential with natural gas prices running below $2 per million British Thermal Units.

It notes the Montney already produces about 3.5 billion cubic feet of natural gas per day, but argues it has the potential to do much better than that.

It quotes analysts at British-based Wood Mackenzie as predicting that by 2018 Montney production could surpass 5 billion cubic feet per day.

It also notes major players like Shell Canada, Exxon Mobil and Progress Energy have made major purchases in the liquids rich shale gas plays of this area, but there are growing concerns about BC LNG development providing access to higher international prices for their product.

The report quotes an analyst with ITG Investment Research in Calgary, who suggests the eight West Coast Liquefied Natural Gas projects which had received National Energy Board approval by the end of 2014, represent more than 17 billion cubic feet per day of potential LNG exports.

It notes most of it will be sourced from the Montney play where Progress Energy, now a fully-owned subsidiary of Malaysian State owned Petronas, has the largest area of land holdings.

However, how much of it is exploited depends on the development of the Petronas Pacific Northwest LNG project, and the same ITG source reportedly has stated if it’s shuttered, it will prevent 2 billion cubic feet per day from coming online.

Other analysts have suggested only a handful of new LNG facilities are required to meet the remaining demand in Asia, and as many as 90 of them have been proposed globally in the past five years — more than a third of them in the U.S.

Add to that, weakening Asian economies — cited as the reason for a recent slide in the area’s LNG demand — and that fuels the question, “Can the Montney Play remain competitive?”