The Montney shale is in the east-central part of British Columbia where companies are stimulating horizontal wells, perforating and fracturing 6-11 zones which cost approximately $100,000-$120,000 per frac interval. It can cost more than $1 million for fracturing each well according to a recent Tristone Capital Inc. study. The study expects estimated ultimate gas recovery to increase to 7 bcf/well from 5 Bcf/well a technology develops. The report also says drilling should increase production to 1 bcfd by end of 2009 from 600 MMscfd in early 2008.

EnCana is the most active operator with approximately 400 wells completing 530 frac intervals.

At Cutback Ridge EnCana is producing about 290 MMcf between their Cadomin tight gas play and the Montney shale play. Cutting costs by using innovative drilling and fracturing technologies has helped the company reduce their cost to drill, stimulate, and complete each horizontal well interval decline by 79%. A frac that used to take 30 days now takes two days. Logistics challenge Horn River developers but EnCana is responding by bringing in fracturing sand and pipe by rail and owns a road in the area. The province’s infrastructure program should help in the future.

In 2003, ARC Energy Trust began breaking open the Upper Montney formation in northeastern B.C. Development surged two years later after ARC completed the play's first multiple stage frac horizontal well at a cost of $7.9 million. With five fracs along 1,500 horizontal metres, the well is still producing 1.6 mmcf/d. ARC recently drilled a 1,900 metre horizontal well, fraced it eight times, spent $5 million and achieved initial production of eight mmcf/d. The company reports finding and development costs of about

$10 per boe at its Dawson project, a netback of about $40 per boe, and total production potential of about five bcf (nearly one million boe) for each well.

Northeastern B.C. has drawn the attention of global giants. In August, the Royal Dutch/Shell Group paid $5.9 billion to acquire Duvernay Oil Corp. With current production of about 27,000 boe/d, Duvernay owns 450,000 net acres in B.C. and Alberta's Deep Basin, virtually all of it characterized by tight gas prospects. It also owns processing facilities in these districts. Further north, Imperial Oil (controlled by Exxon Mobil) has jumped into the Horn River Basin.

Without pipelines, the gas riches of Montney and Horn River will merely sit in the ground. But a solution could be in the offing, with the National Energy Board expected to rule in the first quarter of 2009 on an application by TransCanada to allow rolled-in tariff rates for British Columbia and Alberta pipelines. That requires shifting TransCanada’s Nova Gas Transmission network in Alberta from provincial to federal jurisdiction.

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