BC LNG: A reality check


"  The BC Government has stated that Liquefied Natural Gas (LNG) exports will create a $100 billion dollar “Prosperity Fund” and eliminate the Provincial debt by 2028. Despite current Canadian gas production of just 12.7 billion cubic feet per day (bcf/d), the National Energy Board (NEB) has approved LNG exports from BC of 14.6 bcf/d, with a further 3.4 bcf/d under review.
An analysis of gas production fundamentals in BC reveals that meeting the NEB export approvals would require drilling nearly 50,000 new wells in the next 27 years (double the approximately 25,000 wells drilled in BC since the 1950s). Given the steep production declines associated with shale- and tight-gas, drilling rates of more than 3,000 new wells per year would be required to ramp up production to required export levels, followed by nearly 2000 wells per year to maintain production. Notwithstanding the other well publicized environmental issues with hydraulic fracturing (fracking), which would be the principal completion technology used to produce this gas, water consumption alone during the ramp up phase would exceed that of the City of Calgary, which has more than a million people.
The NEB’s forecasts of gas production in BC through 2035 do not come close to the levels needed for its LNG export approvals. Its reference case forecast for BC is the production of 57 trillion cubic feet (tcf) by 2035, yet 120 tcf are required to meet its approvals (more than three times BC gas reserves). Furthermore, the NEB projects gas production to fall in all provinces except BC through 2035. As Canada’s energy regulator, with a responsibility for ensuring adequate future gas supplies for Canadians, the NEB does not appear to be meeting its mandate. It is uncertain how much of the approved export capacity will be built, but the public would be well advised not to count on an LNG bonanza.  By David Hughes
Hughes-BC-LNG-Jan2014.pdf1.8 MB