Know-How of Regulatory Agency Governing O&G Activities & Calima Energy's Montney Formation Asset

  • Mar 19, 2020 AEDT
  • Team Kalkine
Know-How of Regulatory Agency Governing O&G Activities & Calima Energy's Montney Formation Asset

The BC Oil and Gas Commission (BCOGC) is the local single-window regulatory agency, holding the responsibility of oil & gas (O&G) activity regulation concerning exploration, development, pipeline transportation and reclamation in British Columbia. It also governs renewable geothermal activities in Canada's westernmost province, British Columbia.

Source: BC Oil and Gas Commission

Key responsibilities of the Commission lie in terms of reviewing and assessing applications for proposed activities and ensuring industry complies with provincial legislation and all regulatory needs to mention few.

The Commission, which has a legislative authority to pass decisions on planned O&G activities, provides a single-stop solution for all O&G and associated activities. For the same, companies scouting for exploration, development, production, and marketing of O&G resources in British Columbia need to apply to the Commission, which reviews, assesses and makes decisions on these applications.

Must Read: Coronavirus Effect on Oil and Gas Company, Calima Energy! Is It A Blip?

What are all Legislations and Policies Guiding the Commission?

The Commission in devising the decision for companies is guided by Oil and Gas Activities Act (OGAA) and Regulations, Policy of Government Agencies, inputs from First Nations and others affected by activities and MoU (Memoranda of Understandings), if any, to mention few.

OGAA also authorises the Commission to issue an approval concerning a pipeline that is subject to the National Energy Board Act (NEB Act) or related regulations, which permit the Board to issue orders and licences for oil export and natural gas export.

Export Facilities and Pipeline Map, as of April 2019

Source: Government of British Columbia

Pipelines and Gas Price: An Ally to Grow Together

It has been observed that Canadian players witness a lower gas price, owing to heavy discounting because of constrained pipeline capacity, resulting in an estimated loss of approximately C$20 billion per year to the economy. Presence of pipelines is quintessential to gain access to the export or regional markets and charge price without discounting heavily.

Having said that, the Canadian market is seeing the progress in operational activities due to the start of North Montney Mainline in February 2020. Also, there are many pipelines planned and under construction and expansion phase, with few of them like Trans Mountain and Enbridge anticipated to become operational in 2020.

In line with upcoming pipeline capacity, it is worth mentioning that Western Australia-based Calima Energy Limited (ASX: CE1), which has drilling rights for 64,475 high-class oil & gas acreage (Calima Lands) in the Montney Formation in British Columbia, has received approval for the construction of a pipeline. With a capacity of around 50 Mmcf/d of wet gas and 1,500 bbls/d of well-head condensate, the pipeline would connect the well-pad of Calima Lands with processing infrastructure and regional pipelines.

Must Read: CE1 Galloping High with Calima Land; Stock Up 20%

Calima Energy and Its Montney Formation Asset’s Significance

The significance of the Company itself starts with the presence of its asset in Montney Formation, which has almost half the production cost in comparison to the Australian acreage and CO2 emissions half of the global average. In the milieu of which, there is no denying that the initial production test results at the Company’s asset has demonstrated the top quartile position against its peer group, i.e. 1,640boe/d.

Also, recently the Company strategically secured Tommy Lakes Infrastructure, which is in line with the planned pipeline construction.

Tommy Lakes Infrastructure facilities include compression facilities, persistent annual condensate storage and off-loading facilities, flexible camp facilities for drilling, centre controlled field office and associated pipelines.

The infrastructure would aid CE1 in connecting to NorthRiver's Jedney processing facility, supporting the Company with access to the NGTL, Alliance and T-North pipeline networks, a regional market network. Further, CE1 may also benefit from the transportation of gas to the planned Kitimat Woodside/Chevron LNG Facility as well as Shell/Petronas' LNG Canada Facility.

Please Click - To Know More About the Proximity of the Project.

Calima Energy Outlook

Presently, apart from moving toward closing the Tommy Lake Infrastructure acquisition deal, Calima Energy does not intend to go ahead with further Field Development Plan (FDP) till the time Final Investment Decision is made, which is under purview to the financing of Calima Lands either through project financing facilities and/or JV.

Stock Information - The CE1 stock closed at A$0.004 on 19 March 2020. The Company has a market cap of A$6.47 million.

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