Gas well licensing, drilling, and production are climbing in B.C. in anticipation of the launch of LNG Canada early next year.

Operators are also building inventories of drilled but uncompleted wells to fill the 2.1 bcf/d capacity of the export facility, which is expected to require around 1.5 bcf/d at startup expected in early 2025 before building to full capacity.

Since the beginning of 2023, when the Blueberry River First Nations (BRFN) Treaty Rights dispute was resolved, operators have built an inventory of 935 undrilled B.C. Montney locations, an almost two-year supply at 2023 drilling rates. Licence counts were down 16 per cent in B.C. compared to the first quarter of 2023, when a rush of licences was granted after the BFRN settlement was announced.

Source: gDC Licensing Activity Dashboard

The number of wells spud in the B.C. Montney climbed approximately four per cent in the first quarter of 2024 to 152 wells compared to 148 wells in the first quarter of 2023 despite significantly lower natural gas prices.

The total number of gas wells drilled in all of Alberta declined by 53 per cent to 133 wells in the first quarter of 2024 compared to 280 wells in the same period of 2023.

Source: gDC Wells Spud Dashboard

B.C. Montney production jumped from approximately 6.31 bcf/d in February 2023 to 7.14 bcf/d in February 2024, an 830 mmcf/d increase.

Shell Canada, which owns 40 per cent of LNG Canada, had an inventory of 41 undrilled locations at its Groundbirch operations exiting the first quarter of 2024.

Shell drilled 30 wells since the beginning of 2023 to the end of the first quarter of 2024. Production has increased from 495 mmcf/d in February 2023 to 523 mmcf/d exiting February 2024.

It had 17 drilled but uncompleted wells (DUCs) spud beginning in January 2023 available at the end of the first quarter of 2024.

PetroChina, which has a 15 per cent interest in the LNG export project, has a 20 per cent non-operated interest at Groundbirch.

ARC Resources Ltd., which has contracted 150,000 MMBtu/d of supply to Shell, has an inventory of undrilled 157 licences, although many of these wells are tied to its Attachie expansion project. ARC expects to fulfill its contract volumes from its Sunrise development, which sits at the start of the Coastal GasLink.

Petronas Energy Canada, which owns 25 per cent of LNG Canada, had an undrilled inventory of 128 licences approved since the beginning of 2023 exiting the first quarter. Petronas has drilled 93 wells since the beginning of 2023, with production climbing from 720 mmcf/d to 916 mmcf/d exiting February 2024.

Petronas had 39 DUCs available for completion at the end of the first quarter of 2024 from wells spud from January 2023 onward.

Petronas has a 72 per cent interest and operates the North Montney Joint Venture. Partners include Sinopec Group (15 per cent), Indian Oil Group (10 per cent), and Petroleum Brunei Group (three per cent

Mitsubishi Canada owns 15 per cent of LNG Canada. Mitsubishi has a 40 per cent on-operated stake in Ovintiv Inc.’s B.C. Montney operations under the Cutbank Ridge Partnership. Ovintiv currently has an undrilled inventory of 114 licences. Production averaged 1.7 bcf/d in February 2024, 680 mmcf/d to Mitsubishi.  

Korea Gas Corporation, or KOGAS, owns the remaining five per cent of the export facility.