Calima Energy’s Montney Formation Asset, Calima Lands Set to be Ready-for-Development Project

  • Mar 12, 2020 AEDT
  • Team Kalkine
Calima Energy’s Montney Formation Asset, Calima Lands Set to be Ready-for-Development Project

In the midst of constraint of oil & gas (O&G) egress capacity in British Columbia (BC), Western Australia-based oil & gas exploration and production company, Calima Energy Limited (ASX: CE1) seems on track to lift its BC-based asset from drilling to a development ready project.

The Company’s primary asset lies in the Montney Formation, a super-rich liquid spot in BC, expected to become one of the top plays not only in Western Canada but in North America too. CE1 has drilling rights for 64,475 high-class oil & gas acreage (Calima Lands), considered highly prospective for the formation.

Calima Energy Riding High with Montney Formation Project; Stock Zooms Up 20%: Interesting Read

How Calima Lands Will Become A Ready-for-Development Project?

Any project with all the apt infrastructure in place from extraction to distribution for sale can be said as a development ready project. The status gives immense certainty in commercialisation and revenue generation via O&G sale.

In the milieu of which, Calima Energy recently strategically secured Tommy Lakes Infrastructure, gaining access in a cost-effective way to the Jedney processing facility and NorthRiver Midstream pipeline. This would also aid CE1 with access to regional markets via NGTL, Alliance, T-North and other major pipeline networks.

Significance of Tommy Lakes Infrastructure

Tommy Lakes Infrastructure with an estimated replacement cost of A$85 million and purchase cost of around A$825,000 offers an excellent prospect to the Company both in terms of cost-effectiveness and reducing the requirement of securing few regulatory approvals. Also, re-usage of existing facilities scores high in reducing the environmental impact than the hurdling in new facilities’ planning.

It is worth mentioning that the infrastructure is completely compliant with all the requirements of the Oil & Gas Commission of British Columbia. Further, it is in excellent working condition and has been reported efficient and safe to operate.

Also, apart from export routes to NGTL/AECO, Alliance and T-North/Station 2, the Company will gain access to gas transportation to the planned Kitimat Woodside/Chevron LNG Facility and Shell/Petronas' LNG Canada Facility post the increased pipeline capacity.

Do Read: Calima Received Regulatory Approval to Construct Service Pipeline Connecting Regional Sales Network

The Company has already taken regulatory approval to connect Calima's Pad A suspended wells to the Tommy Lakes Facilities via a pipeline with a carrying capacity of ~50 Mmcf/d of gas and 1,500-2,000 bbls/d of well-head condensate to NorthRiver's Jedney processing facility. The facilities being acquired also include a field office with a control centre along with flexible camp facilities appropriate for drilling operations and continual yearly condensate storage and off-loading facilities.

To Know More About Tommy Lake Infrastructure, click here

How Is the Gas Pricing at The Market?

It has been observed that Canadian producers sell their product at a discount price due to the constraint of pipeline capacity, owing to which the North American nation is estimated to lose C$20 billion per year. TC Energy's NGTL system accounting for approximately 80% market share in gas supply in Western Canada experienced more congestion due to the pipeline constraint. However, the NGTL network was relieved in late-2019 after T-South resumed its full capacity of ~1.7 Bcf/d after facing an obstacle in the pipeline due to rupture in 2018.

Having said that, come 2020, North Montney Mainline came on stream in February 2020 with a flow capacity of ~2bcf/d, resulting in a new outlet from northeast BC and lowering the Station 2 gas price discount, which is happened to be the closest pricing point from Calima Energy.

It is also important to mention that the expansion of Trans Mountain is under construction and Enbridge is anticipated to add ~100 MB/d in 2020 via the Express system expansion and Mainline optimisation.

Hence, the addition of new pipeline capacity is likely to increase the gas price in future, which in turn is expected to aid Calima Lands economies, as C$2.00 Gj is a threshold positive inflection point.

Long-term Future Prices and Condensate and NGL (Natural Gas Liquid) Prices

CE1 reports

Presently, Calima Energy is moving toward the completion of Tommy Lake Infrastructure acquisition, a quintessential step toward Field Development Plan (FDP), making Calima Lands a development-ready project. Around 70% of production from Calima Lands is expected to be gas.

As of now, the Company is focusing on finalising a Final Investment Decision, which is subject to securing fund from either project financing facilities and/or JV, supported by the sustained increase in gas price.

Stock Information

The CE1 stock closed the day’s trade at A$0.005 on 12 March 2020 and the Company has a market cap of A$12.93 million.

This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. The above article is sponsored but NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) under discussion. We are neither licensed nor qualified to provide investment advice through this platform.


All pictures are copyright to their respective owner(s) does not claim ownership of any of the pictures displayed on this website unless stated otherwise. Some of the images used on this website are taken from the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image.


There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.

Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.

As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK