British Columbia Pipeline Network Vis-à-Vis Calima Lands in Montney Formation

  • April 17, 2020 05:31 PM AEST
  • Team Kalkine
British Columbia Pipeline Network Vis-à-Vis Calima Lands in Montney Formation

Pipeline! It is the lifeline of the O&G industry, determining the landed price of O&G depending on its availability. The pipeline helps in transporting natural gas and oil from producing wells to processing facilities and refineries, which are subsequently sent to prospective consumers.

Who operates the pipeline in Canada?

In Canada, the inter-provincial pipeline is operated by the federal government and intra-provincial is operated by respective provincial authority.

Companies seeking to construct, operate and maintain a pipeline in British Columbia (BC) must apply to the BC Oil and Gas Commission (BCOGC), which then reviews the application as defined in the OGAA (Oil and Gas Activities Act), Pipeline Crossings Regulation, and Pipeline Regulation.

BCOGC regulates around 50,047 km of pipelines, of which 78% carry natural gas.

For More Information on Regulatory Agency Governing O&G Activities, Please Click Here.

O&G Volume Transported Safely by Pipelines

The Canadian Energy Pipeline Association (CEPA) is an association of pipeline companies, engaged in building a secure energy future for Canada. In 2018, CEPA transported around 97% of O&G produced in Canada via 121,000km of pipelines’ network to regional consumers, in addition to the world.

In the same year, CEPA delivered over 5.9 trillion cubic feet of natural gas to the consumers, of which 54% were Canadian users and the remaining 46% was exported to the US. Similarly, 4% of 1.6 billion barrels of crude oil was transported to Canadian users and the remaining 96% to the US.

Introduction to Calima Energy- O&G Explorer & Producer

Western Australia-based, Calima Energy Limited (ASX: CE1) has a crucial asset, namely Calima Lands in Montney Formation in British Columbia. The Company has all the infrastructure in place to call it a development-ready project, which is subject to completion of a Field Development Plan (FDP).

CE1 secured regulatory approval in December last year for a pipeline construction project to connect the Company’s well pad with regional pipeline and processing infrastructure, i.e. to the recently secured Tommy Lakes Facilities. The Tommy Lakes Infrastructure along with the approved pipeline with ~ 1,500-2,000 bbls/d of well-head condensate and 50 Mmcf/d of gas capacity aids in accessing the NorthRiver's Jedney processing facility in a cost-effective way.

To Know More About Tommy Lakes Infrastructure: Read CE1 Secures Tommy Lakes Infrastructure Facilities.

Significance of NorthRiver's Jedney Processing Facility

NorthRiver Midstream is a gas gathering and processing business with presence across majority of Montney Resource Play region in Northwest Alberta and Northeast British Columbia. It also offers connectivity to major O&G markets such as the US Pacific Northwest, US Midwest and Western Canada.

Hence, with the acquisition of Tommy Lakes Infrastructure, CE1 will get access to the regional markets and export routes through NGTL/AECO, Alliance and T-North/Station 2 including additional gas transportation access via the Kitimat Woodside/Chevron and LNG Facility of Shell/Petronas, subject to the pipeline capacity increment.

Let’s now gauge through the different export routes and O&G markets.

NGTL/AECO – Connects Markets in Canada and the US

NGTL (NOVA Gas Transmission Ltd.), like NorthRiver, is a natural gas gathering and transportation system in Northeast BC and Alberta. The gas produced in Western Canadian Sedimentary Basin is transported via NGTL to the North American markets (United States and Canada). It has four key gates that interconnect the region, for example: -

  • East Gate: Connects TransCanada's Foothills Pipeline (near McNeill, Alberta) and TransCanada's Canadian Mainline (near Empress, Alberta). As of 30 December 2019, the capacity of the gate was 4.993 billion cubic feet per day.
  • North and East Gate: Delivery of gas in Northern Alberta regions. As of 30 December 2019, capacity of the gate was 5.128 billion cubic feet per day.
  • West Gate: It interconnects with TransCanada's Foothills Pipeline in BC, and as of 30 December 2019, the capacity of the gate was 2.6938 billion cubic feet per day.
  • Upstream of James River: It gets throughput of the northwestern part of the NGTL grid and brings flows from the Horn River and the Groundbirch pipelines. As of 30 December 2019, the capacity of the gate was 10.563 billion cubic feet per day.

AECO is a gas hub storage facility in the southern Alberta region, which serves as a reference point of NOVA inventory transfer. Also, it is worth mentioning that the AECO hub gas storage is one of the largest natural gas hubs in North America, encompassing an extensive network of export pipelines, and AECO Hub price is the benchmark of the gas price delivered anywhere within the NOVA grid.

Alliance – Integrated Transmission Line Between Canada and the US

Alliance is an integrated transmission pipeline system connecting the US and Canada. It helps in transporting gas to the Chicago market hub from the Willis?ton Basin and Western Canadian Sedimentary Basin. The Alliance system includes a total transmission pipeline network of ~3848km.

T-North/Station 2 – Part of BC Pipeline

T-North is a section of BC Pipeline situated in northeastern BC, bringing production traced from several processing plants to a compressor station in close proximity of Chetwynd. While, Station 2 is a second compressor station out of total 19 in BC Pipeline.

BC Pipeline is stretch across Fort Nelson (northeast BC) and Gordondale (around the B.C.-Alberta border), to the Huntingdon/Sumas (Canada-United States border) with its pipeline network of 2858km.

Kitimat LNG Facility and LNG Canada Facility – Upcoming Projects

  • Kitimat LNG Facility of Chevron/Woodside Petroleum, boasting an export capacity of 0.75-1.5 BCF/day, will encompass up to two liquefaction trains, LNG storage tanks and a marine jetty and berth to accommodate specialised LNG carriers.
  • LNG Canada Facility is a JV among Shell Canada Energy, Petronas, PetroChina, Mitsubishi and KOGAS in the interest of 40%, 25%, 15%, 15% and 5%, respectively. The facility is likely to entail LNG liquefaction and storage facilities, two cryogenic LNG transfer pipelines and marine terminal facilities and other infrastructure.

Initially, it is planned to build two LNG processing units with an LNG production capacity of around 6.5Mtpa each with an option to increase further by two LNG processing units, i.e. total of four processing units with a production capacity of around 26Mtpa.

Calima Energy seems to be well versed with all the infrastructure in place, giving immense certainty in commercialisation and revenue generation via O&G sale from its asset. The Company is currently scouting for partners or investors either in terms of a joint venture or project financing or both for a Final Investment Decision (FID).

Interesting Read: Calima Management Shift, A Move to Commercialisation.

Stock Information- The stock last traded at A$0.003 on 17 April 2020, delivering a return of 33.33% in the last one month.

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