In what has to be one of the most bizarre and misleading press releases I have ever seen, the B.C. government issued a report in reference to the province's Montney Formation, that claimed: "this potential [natural gas] supply can support development and LNG export operations for more than 150 years".
Let's take a closer look at this 150 year number.
As noted by Metro News, the 150 year number comes from "domestic rather than global consumption" numbers. That is, it is obtained by taking the hypothetical resource volume in B.C. and dividing it by the current Canadian annual volume consumption of natural gas. In other words, it tells us how many years it would last Canadians for their domestic needs assuming no increase or decrease in national consumption rates.
But here's the problem... Almost by definition, LNG is for export not domestic consumption.
So let's do a reality check:
Every year BP undertakes a Statistical review of World Energy. As noted by BP, global natural gas proven reserves would supply current global production rates for 55.7 years. Canada contained (at the end of 2012) 1.1 per cent of global reserves. Doubling B.C.'s (not even Canada's proven reserves) would have a very small effect on global resource lifetime.
In other words, the 150 year number, and in particular, the statement by a B.C. government official that, "B.C. is very confident that the natural gas supply in the province can support long-term operations for 150 years or more," is utter nonsense and, in my opinion, irresponsible hype that is misleading British Columbians.
There is no doubt that the Montney Formation is an important natural resource for our province. This is largely because the shale gas formation contains condensates (liquids) in addition to the natural gas. These can be sold in addition to the natural gas. This is quite different from the dry gas fields in the Horn River shales near Fort Nelson, B.C. which require a North American natural gas price of around $5.00/million BTU to be economical. With natural gas trading at about $3.38/million BTU in North America, the Horn River play is not economical.
The analysis above is validated by a Nov. 4 news release from Canadian natural gas giant Encana noting that it was going to lay off 20 per cent of its staff in North America as well as dramatically reduce its shareholder dividend. This does not bode well at all for Encana's interests in the Horn River region of B.C.
Instead of chasing the falling fossil fuel economy of yesterday, B.C. should be heading towards a prosperous future by developing its clean tech sector -- the sector involved in the generation, transmission, storage and end use of renewable energy.