Montney Positioned For Growth This Winter: New Daily Oil Bulletin Report
So, what’s up in the Montney?
Nearly everything, according to a new Montney activity report released by the Daily Oil Bulletin based on data from geoLOGIC system ltd.’s gDC Dashboards and Evaluate Energy.
The report, entitled Measuring the Montney, examines licensing, drilling and production trends in the context of current market conditions and as operators prepare for the winter heating season.
“Montney activity and production has recovered from the COVID-19 downturn,” says Bemal Mehta, managing director, Energy Intelligence at geoLOGIC.
“Drilling activity picked up throughout 2021. With oil and gas prices trending positive, Montney operators are seeing higher operating cash flows and free cash flows. Analysis by Evaluate Energy shows this capital is going to pay down debt and a significant share is going back into operations.”
Recent investments in natural gas take-away capacity on TC Energy’s NGTL system should come into play this winter as well, reducing bottlenecks out of the Montney. Similar upgrades to pipelines in the U.S. Midwest should help incremental supply increases reach the market.
With Enbridge Inc.’s Line 3 expansion in operation, there could also be a slight uptick in condensate demand as oilsands operators add incremental supply, says Mehta.
Northeastern British Columbia operators have come to an initial agreement with Blueberry River First Nations to address Indigenous rights and title issues that stalled licensing and land sale activity. It should clear the way for a resumption of activity in the affected areas.
Major consolidation in the Montney over the last two years could temper some activity as large operators work to integrate new assets into portfolios while developing capital spending plans for 2022. The recent announcement that B.C. will review royalty rates may also have an impact. Overall, Mehta says analysis of activity, production and investment data points to growth this winter and beyond.
“The pricing deck going forward is positive. With a strong inventory of well licences in hand, operators are positioned to advance short-cycle projects within the main Montney sub-plays in both Alberta and British Columbia.”