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Energy & Mines

September 2017

BC Land Sales

Alberta Land Sales

Encana Delivers New Montney Plant

Rig Release Count

Nexen Ends Aurora LNG Feasibility Study

Canada’s First Offshore Wind Farm

Land Buying Recovery

Well Licenses

BC Land Sales

By Richard Macedo

The BC government brought in $10.74 million at its September sale.

Industry acquired 5,632 hectares at an average price of $1,907.64.

At the nine-month mark, the province has taken in $169.18 million on the sale of 64,050 hectares at an average price of $2,641.30.

Roughly half the bonus bids at the September sale came from a lease parcel purchased by NRG Landsolutions Inc. for $5.2 million, at an average price of $9,844.46.

The broker also picked up another lease for $815,446, paying an average of $3,088.81.


JuneWarren-Nickle's Energy Group

Alberta Land Sales

By Richard Macedo

The Alberta government attracted $23.88 million in bonus bids at its land sale on September 13, with oilsands parcels accounting for over half the bonus bids.

Industry picked up 46,952 hectares at an average price of $508.67. This was the first notable oilsands bonus haul in more than a year. The June 22, 2016 sale included $11.17 million spent on oilsands parcels.

Year-to-date for 2017, the province has attracted $274.63 million on 805,879 hectares at an average price of $340.79. To the same point in 2016, industry had paid $117.9 million to purchase 707,344 hectares at an average price of $166.68.

Of note, a total of $12.3 million worth of oilsands parcels were sold, including one picked up by Stomp Energy Ltd. for $10.15 million in the Athabasca oilsands area.

Also in the Athabasca oilsands region, Stomp picked up a lease for $1.79 million at an average of $225.13.


On the petroleum and natural gas (P&NG) land sale posting, Elk Run Resources Ltd. acquired a two-section licence for $2.1 million, at an average price of $4,098.98.

An adjacent parcel, picked up by Scott Land & Lease Ltd., attracted a bid of $540,917.

Meanwhile, another parcel acquired by Windfall Resources Ltd., received a bid of $1.18 million, which worked out to an average of $3,061.89.

The Alberta government on September 27 brought in $34.8 million at its land sale.

Industry picked up 96,240 hectares at an average price of $361.57. Year-to-date, the province has collected $309.43 million on 902,119 hectares at an average price of $343.01.

Highlights of the sale included a group of leases, which combined for total bids of nearly $15 million.

The highlight in this group was an $8.04 million parcel (average of $5,233.11) acquired by AIM Land Services Ltd., which was the land sale high bid.

Also, Landsolutions GP Inc. picked up a lease for $3.22 million, generating an average price of $5,589.14.


JuneWarren-Nickle's Energy Group

Encana Delivers New Montney Plant

Encana Corporation successfully started up the Tower processing plant ahead of schedule and under budget on September 20.

The plant is the first of three Veresen Midstream facilities that support Encana's condensate-focused growth plan in the Montney.

The Tower facility is in the process of ramping up. The two other new plants, Sunrise and Saturn, are also ahead of schedule and under budget with Sunrise expected to start up by mid-October and Saturn before year-end.

These new plants will more than double Encana's Montney liquids production from the fourth quarter of 2016 to the fourth quarter of 2017. The company's liquids and gas volumes in the play are expected to grow throughout 2018 as drilling programs bring the plants to full capacity.

Encana's innovative midstream agreement with Veresen Midstream enables Encana, via the Cutbank Ridge Partnership, to construct and operate the three plants, as well as any future build opportunities, on behalf of Veresen Midstream on a contracted basis. Veresen Midstream funds and owns the facilities and Encana pays to use them through a fee-for-service agreement.

Journal of Commerce

Rig Release Count

By Stephen Marsters

Operators rig released 4,744 wells across Canada to the end of August, excluding experimental wells, up 125 per cent from 2,105 wells drilled in the first eight months of 2016.

Total metres drilled improved 118 per cent to 12.78 million metres from 5.87 million metres in January-to-August 2016.

Excluding experimental wells, Alberta rig released 2,422 wells over the first eight months, up 137 per cent from 1,024 a year ago, while total metres drilled lifted to 7.32 million metres from 3.22 million metres to the end of August last year (an increase of 127 per cent).

In Saskatchewan, eight-month rig releases rose 121 per cent to 1,769 from 802 a year ago. Metres drilled lifted 114 per cent to 3.47 million metres from 1.63 million metres over the first eight months of 2016.

The rig release tally in B.C. increased 83 per cent to 391 after eight months, compared to 214 last year, while operators in the province drilled 1.66 million metres versus 891,575 metres to the end of August last year (up 86 per cent).

Manitoba’s rig release count after eight months lifted 181 per cent to 152 compared to 54 a year ago (up 181 per cent). A total of 283,259 metres were drilled to the end of August compared to 100,945 metres in January-to-August 2016.

Of the wells drilled, to the end of August, 2,097 still have no final status (oil, gas, dry or service). Of those with a status designation, 76.27 per cent were reported as an oil well (2016: 61.55 per cent) and 20.23 per cent were listed as a gas well (2016: 27.02 per cent).

Operators across Canada rig released 712 wells in August, up 79 per cent from 398 wells drilled a year ago.

August rig releases, excluding experimental wells

Alberta operators drilled 345 wells in August compared to 188 a year ago (up 84 per cent), while producers in Saskatchewan rig released 279 wells last month versus 174 in August 2016 (up 60 per cent).

In B.C., operators drilled 55 wells in August compared to 24 a year ago (up 129 per cent). Manitoba operators rig released 30 wells last month compared to 10 a year ago (an increase of 200 per cent).

Wells drilled, including experimental wells

Including experimental wells, producers drilled 5,272 wells across Canada to the end of August compared to 2,629 in the first eight months of 2016 (up 101 per cent).

In August, producers drilled 717 wells, up 75 per cent from 409 a year ago.

JuneWarren-Nickle's Energy Group

Nexen Ends Aurora LNG Feasibility Study

Aurora LNG and its partners, Nexen Energy ULC (a wholly-owned subsidiary of CNOOC Limited) and INPEX Gas British Columbia (IGBC), have made the strategic decision to end the Aurora LNG feasibility study and will “cease all investigation activity,” effective immediately.

Over the past four years, Aurora LNG has been conducting a thorough feasibility study on liquefying and shipping LNG from the northwest coast of British Columbia to Asian markets. Through this feasibility study, Aurora LNG has determined that the “current macro-economic environment does not currently support the partners’ vision of developing a large LNG business at the proposed Digby Island site.”

Upstream operations from the partners’ Horn River natural gas assets in northeast British Columbia will continue, and the partners will also monitor the North American gas market to evaluate future upstream and downstream investments according to market conditions.

JuneWarren-Nickle's Energy Group

Canada’s First Offshore Wind Farm

By Maurice Smith

The proponent of Canada’s first offshore wind farm off the BC coast has attracted the interest of the world’s biggest offshore wind farm developer, advancing a proposed 400 megawatt project that could feed green power to a nearby liquefied natural gas project.

Vancouver-based NaiKun Wind Energy Group has signed a letter of intent with Denmark’s DONG Energy to advance the project proposed in one of the world’s richest wind resource areas in Hecate Strait between Haida Gwaii and Prince Rupert.

The clean energy it produces could feed both LNG projects proposed on the BC northwest coast to the east and Haida Gwaii to the west, the largest part of the province not on the grid which is currently reliant on costly diesel-produced power, said Michael O’Connor, president and chief executive officer of NaiKun.

NaiKun’s 550-square-kilometre permit area is in shallow, 12-15 metre deep, water about five kilometres at its closest to the remote northeast coast of Haida Gwaii, an area that harbours some of the strongest, most-consistent winds in the world. Wind turbines would be positioned a minimum of eight kilometres offshore, southeast of Rose Spit.

With power production 97 per cent of the time, a gross capacity factor of greater than 60 per cent, and with more than 19 years of wind data showing 10 metres per second average wind speed, the project is poised to be cost-effective and reliable, according to NaiKun. Fully developed in subsequent phases, the wind resource in the permit area alone could provide in excess of two gigawatts of power, the company estimates.

The project has the Environmental Assessment Certificates from the provincial and federal governments for the first phase of the project. With final approvals, which would be at least a year off, it would take another three years to build and commission, well within the time frame of any LNG projects, O’Connor said.

JuneWarren-Nickle's Energy Group

Land Buying Recovery

For the eight month period in 2017, land buying in Canada has surged by over 200 per cent from the same point in 2016, driven by Alberta and British Columbia.

In those two provinces, the East Shale Basin and Montney have been largely responsible for the reversal of fortunes. To the end of August, producers opened their wallets and plunked down $443.67 million in bonus bids, up from $141.6 million over the same eight-month stretch of 2016, which was a historically low period of land buying.

Breaking down land spending further, $250.75 million was spent in Alberta year-to-date to August, and $158.43 million in British Columbia.

JuneWarren-Nickle's Energy Group

Well Licenses

By Stephen Marsters

Over the first eight months of the year, a total of 6,114 wells across Canada have been permitted — about double last year’s tally of 3,098.

Operators across the country licensed 764 wells last month compared to 528 wells permitted in August 2016 (up 45 per cent).

Alberta approved 438 new licences in August compared to 269 a year ago. To the end of August the province has licensed 3,078 wells, up 89 per cent from 1,632 wells a year ago.

In Saskatchewan, 214 well permits were issued last month compared to 231 in August 2016. The province has permitted 2,435 wells in the first eight months of the year versus 1,213 a year ago (an increase of 101 per cent).

British Columbia approved 84 wells in August compared to 21 a year ago. The province has approved 510 wells to the end of August compared to 185 in the first eight months of 2016 (up 176 per cent).

Manitoba granted 28 well authorizations last month, up from six in August 2016. Over the first eight months of the year, Manitoba has licensed 144 new wells compared to 61 a year ago (an improvement of 136 per cent).

Operators across Western Canada licensed 442 oil and bitumen wells last month, up from 370 in August 2016. Over the first eight months of the year, 4,116 oil and bitumen wells have been permitted compared to 1,899 a year ago (an increase of 117 per cent).

In August, 185 gas wells were permitted in Alberta, B.C. and Saskatchewan compared to 144 last year. In the first eight months of 2017, operators in these three provinces have licensed 1,052 gas wells, an increase of 27 per cent from 828 gas permits in the comparable period last year.

Sixteen oilsands evaluation holes were permitted in August compared to none a year ago. Operators have licensed 81 oilsands evaluation holes in the January-to-August period versus 149 in the first eight months of 2016.

To the end of August, operators have licensed 4,988 horizontal wells, or about 86 per cent of the total wells authorized across Canada (excluding experimental wells), and up from 2,479 horizontal wells in January-August 2016.

Including experimental and oilsands evaluation holes, the top five licensees of new wells in August were: Canadian Natural Resources Limited (47), Tourmaline Oil Corp. (45), Crescent Point Energy Corp. (43), Raging River Exploration Inc. (28) and Husky Energy Inc. (25).

JuneWarren-Nickle's Energy Group