Gas auction attracts $370 million to B.C.
By Scott Simpson
Vancouver Sun
October 23, 2009
It's the second-largest average per-hectare price paid to lock up new drilling rights in northeast patch
There appears to be no letting up in the race to lock up natural-gas wealth in northeast British Columbia.
On Thursday, Energy Minister Blair Lekstrom announced that the province received $370 million in bonus bids in its monthly auction for gas exploration rights, making it the sixth largest monthly sale on record, and the second-largest average per-hectare price paid to lock up new drilling rights in the province's northeast gas patch.
Bidders anxious to secure tenure of one of North America's hottest gas patches scooped up 58 parcels covering 65,787 hectares, paying an average per-hectare price of $5,625, second-highest in B.C. history, the government reported.
The sprawling Montney gas field attracted most of the interest. It is one of two major new fields attracting record bids. The other is Horn River. Both are in British Columbia's portion of the Western Canada Sedimentary Basin.
"Most of what we are talking about today is in the Montney formation," Lekstrom said in an interview. "Every day, both of these formations seem to get a little better as there is more work done on them. They seem to expand and the quality and the opportunity expands at the same time, so I think these numbers today are reflective of that."
So far this year B.C. has gained $700.6 million in drilling rights despite a protracted dip in natural gas prices that has substantially reduced gas and oil exploration activity in Western Canada and across North America, where moderate weather and growth of unconventional gas resource development in the United States are creating an unprecedented glut of gas in storage.
Lekstrom said the auction results are partially attributable to the government's recent decision to slash gas royalty payments for one year, attracting more investment to B.C.
In September, the minister announced that wells drilled from September 2009 to through June 2010 will receive a one-year royalty rate of two per cent compared to the average rate of 20 per cent.
"The latest stimulus package we put out, I think, gives some certainty to the industry of where our province stands with oil and gas and the future," Lekstrom said.
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Posted by Arthur Caldicott on 23 Oct 2009