Balancing Hype and Hope in the Horn River

As the first truly large shale source in Canada, the Horn River Basin has become a living laboratory of sorts where the eyes of the world are watching to see if expectations and reality will come together.

More than five years in, the first glow of promise is being fueled by better communications. The early hype is being transformed into real hope. And while there are still unknowns, the Northeast is starting to see the tangible benefits from the development.
“Everybody wanted to see dollar signs, which was completely natural, but nobody really knew what this meant, but everybody was talking about it,” said Energy Services BC procurement officer Laurie Dolan.”
The producers too had their share of both expectations and questions. There has been more shale extraction from American sites but even there, the nature of the process is relatively new and the technology to effectively extract the gas is still developing. Ultimately, it comes down to money and the environment.
“Because the Horn River Basin was the first shale gas discovery in Canada, there has been significant attention drawn to activities, including media announcements and development activity updates,” said Kevin Sheer, chair of the Operations Sub-Committee of the Horn River Basin Producers Group (HRBPG) and Business Unit manager at Apache Canada.
“The Horn River Basin has the potential to be one of the most promising unconventional natural gas reservoirs in North America however, it should be noted that producers in the Horn River Basin are still working to establish commercial viability.”
The biggest questions surround issues like the price of natural gas and industry cost trends; infrastructure needs such as pipelines to transport natural gas to markets and roads; technological developments; and the ability to meet environmental requirements and secure support from stakeholders.
Many of those variables are outside the singular control of the producers however, their approach to local stakeholders, something they can control, is garnering them growing support from that sector.
“Things have changed incredibly in a year. When I got this job last August it was to facilitate definitely a local presence in this development and there were some pretty irate people watching the Alberta plates coming into town,” said Dolan.
Rumblings and uncertainty rolled through the Peace as the players jostled for a position that would ensure they got their piece of the pie – even though they were unsure just what the pie was.
“I honestly don’t think anybody, including the Producers Group, really knew what was going to happen,” said Dolan.
People didn’t know what services were going to be needed. People didn’t know what infrastructure would be needed. People didn’t know what fraccing was. People didn’t know how to get the jobs that were there. And people didn’t know how the discovery would impact them.
Throughout the Northeast, the initial security around the site couldn’t hide the potential and the global attention underscored the possibilities. Both excitement and frustration created expectations of work and wealth and within the service sector, simultaneously expectations of being shut out in favour of Alberta companies were developing.
“When I started last fall my office was always full of people saying, ‘I’m not getting work. How can I get work? Who do I contact? I was out there and counted 84 Alberta license plates within five seconds’. Now I’m hearing contractors that are out working coming into my office saying, ‘I’ve got a problem. I was just told by an oil company unless I get some local employment out there they’re going to shut me down’,” said Dolan. In a short year, the pendulum has swung.
“At first, a lot of these jobs were going to huge prime contractors that nobody even in all of Northeast BC could probably facilitate, but I think after that, the locals – and local is Northeast BC – found their niche was working not for oil companies, but for these prime contractors,” said Dolan.
What did happen was the ‘so there’s a gas find’ attitude has gradually been replaced by an understanding of what was discovered and the knowledge to tap into the potential.
The other thing that happened was the Producers Group.
The companies – Apache, ConocoPhillips, Devon, EnCana, EOG Resources, Imperial Oil, Nexen, Pengrowth, Suncor, Quicksilver and Stone Mountain – are working together to minimize environmental impacts and maximize benefits to the area.
“The best thing that ever happened with the Horn River project was the conception of the Horn River Producers Group. It has been brilliant and through that one voice for all those 11 oil companies has made a huge difference,” said Dolan.
The highly competitive nature of the industry breeds by necessity, as certain level of secrecy however, this unique collaboration had opened the lines of communication and a tentative trust has grown from that.
“Normally you wouldn’t get too much out of oil companies about what they’re doing and why and ultimately, they (the producers) have had a terrific respect for informing Fort Nelson, so that has gotten a lot better from even a year ago,” said Dolan.
She attributes a lot of the early confusion to a lack of information and to the fundamental differences in the perspectives of internationally focused oil companies and local businesses.
“Everybody in Fort Nelson has dealt with oil companies before and they know that the people on the ground, their perception of what should happen is completely different than the CEO and chartered accountant sitting in an office somewhere,” said Dolan.
“That’s why we will never understand a lot of their decisions because we’re on the ground here. We’re not up to the level where we see the huge picture within the whole organization…we just see our backyard.”
On a larger scale, more than locals are watching for changes in operations, technological developments and environmental impacts.
Because the processes involved are water-intensive, that has become one of the key variables in the development of the area. The development of subsurface water sources, an industry priority, could amount to savings by providing the necessary water for operations while limiting the drain on fresh water sources valued by environmentalists and outdoor enthusiasts both.
“Producers in the Horn River Basin were some of the first to look at non-potable water sources for use in operations,” said Screen. “Working with Geoscience BC, the Horn River Basin Producers Group have commissioned a study to evaluate water availability in the area.”
The study focused on identifying and evaluating deep geological water sources for shale gas production. The $3.5 million Phase I research was released earlier this year.
The findings included a Horn River Basin stratigraphic framework for hydrogeological and deep aquifer analysis; aquifer and fluid data from deep water wells that may be used for water source and fluid disposal; and systematic hydrogeological investigation of potential aquifers in the Horn River Basin to quantify and map reservoir capacity and productivity / injectivity potential.
Surrounded by environmentally sensitive and treasured ecosystems, water isn’t the only environmental concern for the development. One of the benefits of the consortium is their enhanced ability to operate with a mind to minimizing cumulative impact.
“Producers within the Horn River Basin have been developing innovative ways to reduce both overall costs and the environmental footprint of the development,” said Screen.
Shared roads, pipelines and other infrastructure have been a key part of developing the basin; the shared Cabin Gas Plant is probably the most significant example of this.
“While infrastructure needs are being constructed for parts of the basin, companies continue to look at ways to reduce overall costs in order to make this project economically viable in the future,” said Screen.
In the Town of Fort Nelson, infrastructure takes on a different hue.
“I’ve never seen it like this in the summer. This project is going to go 12 months of the year. Our little town is just bursting,” said Dolan.
Despite that, the development of both commercial and residential real estate has been slower than some would like.
So far, explained Dolan, there haven’t been a lot of investors wanting to put their neck out yet, but she adds that people are trying to develop and economic/social impact plan to manage development and in her opinion, they are doing a good job considering all the things that are still unknown.
“You’ve really got to put things into perspective. I think our community is wonderful but I tell you, the person that’s lived in Cranbrook and has a support system there, they’re not going to move so I think it could be a slow gradual thing…the infrastructure’s not set up right now,” said Dolan.
Understanding that the corporate priorities could flip from the Horn River to some other location has added to some of the caution.
An annual Horn River Symposium to which the public is invited and an annual Trade Expo have helped the HRBPG build rapport with locals and provide a conduit for information exchange.
The Producers Group started the Fort Nelson Energy Expo in 2008 because employment was a big concern in the area. The number of exhibitors participating has almost doubled from the initial 40 member companies, service companies, local vendors, educational institutions and career service agencies.
The Producers Group also provided funding for an Oil and Gas Field Operations Training Program at the Fort Nelson campus of Northern Lights College.
“We have our Energy Expo coming up in September, which the Horn River Basin Producers Group puts on. They’re all here. They all will have their environmental people, their community affairs people, their procurement people, and right now they’re working with the community,” said Dolan.
And they’re also going to tell people in this Expo what’s going on and what they’re doing.
Screen reports that they estimate approximately 70 horizontal wells will be drilled in the Horn River Basin in 2010.
“Producers active in the Horn River Basin are at different stages of development.  Some are starting to bring natural gas on production; others are just beginning the exploration and evaluatory phases.  Results are still encouraging and companies are still investing in the area,” said Screen.
Dolan said she believes there will continue to be a lot of variables in the future but things are positive. Other companies coming to Fort Nelson have become a “nice addition supporting the town” instead of a source of resentment.
“My motto has been, working with the producers, with government and with the citizens of Fort Nelson – knowledge is power. We need the information, we need to be responsible to get it, we need to keep encouraging the producers to communicate, and they have,” said Dolan.
“That group has made a promise to Fort Nelson and three years ago and to me they are fulfilling that promise and Fort Nelson is the winner so far. Who knows what’s going to happen in the future – as long as we know what is happening.”