Oil & Gas Companies Take Serious Interest in British Columbia's Horn River Shale Play

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Researched by Industrial Info Resources (Sugar Land, Texas)--One of North America's newest shale gas plays is attracting a lot of attention from numerous domestic and foreign oil & gas companies--both the majors and midsize companies. The Horn River play is a shale formation with an estimated 250 trillion cubic feet of natural gas reserves, of which an estimated 10-20% is recoverable, equating to between 25 trillion and 50 trillion cubic feet of recoverable natural gas. Some of the development wells are producing an average of 16 million to 18 million cubic feet per day (MMcf/d) of natural gas. The Horn River formation is located in the far northwest corner of British Columbia.

Companies such as EnCana Corporation (NYSE:ECA) (Calgary, Alberta), with a large stake and the possibility of producing 3.5 billion cubic feet per day (Bcf/d) is leading the pack in developing the resources. Exxon Mobil Corporation (NYSE:XOM) (Irving, Texas) has acquired 250,000 acres in the Horn River. The company's first four development wells are producing up to 18 MMcf/d of natural gas. Taqa North Limited (Calgary), a unit of Abu Dhabi National Energy Company (ABD:TAQA) (Abu Dhabi, United Arab Emirates), has extended its presence in the Horn River by acquiring two large exploration licenses for which the company paid an estimated CAD $63 million at British Columbia's June 17 land sale. BP plc (NYSE:BP) (London, England) is considering the acquisition of a sizable stake in the area as well.

The production rates of between 16 million and 18 million cubic feet per day are approximately 5 times the average production of wells in the Barnett shale play in Texas and are comparable to the big wells in Louisiana's Haynesville Shale play. As time moves forward, shale gas will take an even greater role in natural gas production as the production plays move from the traditional conventional production areas to the shale. Some estimates place the total reserves of natural gas trapped in shale formations as high as 1 quadrillion cubic feet, with much of it in North America. One company poised to take advantage of processing the natural gas produced in the Horn River shale is Spectra Energy Corporation (NYSE:SE) (Houston, Texas), which has 14 large natural gas processing facilities in the area with extensive gathering assets. Industrial Info is currently tracking approximately $750 million in natural gas related projects in the Horn River Shale.

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