John Rustad: oil can be big in B.C.

“We’ve got to find a way to get oil to the market,” says Rustad

Map shows the location of the Montney Formation

British Columbia has historically been a natural gas producing province, with natural gas accounting for approximately 97 per cent of the total production of oil and natural gas.

However, during a recent visit to Burns Lake, MLA for Nechako Lakes John Rustad said B.C. has the potential to become a big oil producer.

He was referring to tight oil discoveries in the Montney Formation, located in northeastern B.C., south of Fort Nelson and spread into northwest Alberta past Grande Prairie. The thick and geographically extensive siltstones of the Montney Formation are expected to contain 1125 million barrels of marketable oil.

“The new jobs this could create for the people of B.C. is exciting, not to mention the additional revenues that could be generated,” said Rustad. “We could be seeing 500,000, maybe one million barrels a day.”

“It’s worth watching to see how this develops in the coming years,” he added.

Montney’s oil resource is only in the initial stages of development. According to The Canadian Press, in 2014, Calgary-based ARC Resources started producing light oil from its first eight-well pad in the Tower region, about 40 km south of Fort St. John. Since then, ARC added two pads and was contributing about half of the province’s total crude output of more than 26,000 barrels per day.

Other companies that have holdings in that area include Encana Corporation and Tourmaline Oil.

“We’re anticipating [other] companies will start going after it in the near future,” said Rustad. “B.C. as a government is not involved in oil and gas exploration and production; if this exciting opportunity develops it will be driven by market opportunities.”

A small proportion of British Columbia’s oil is refined within the province while the majority is sent to markets in Alberta and the United States.

“We’ve got to find a way to get oil to market, whether that’s Energy East, whether that’s TransMountain, or other options,” said Rustad. “We need to find ways of dealing with this.”

Tight oil is found within reservoirs with very low permeability that require hydraulic fracking (fracking). In 2016, a study published online in the journal Seismological Research Letters confirmed the link between fracking and induced earthquakes recorded in northeast B.C. More than 60 per cent of the quakes were linked to fracking and only five to 10 per cent of the earthquakes had a natural tectonic origin.

When asked how government would handle resistance to oil development, Rustad said B.C. has some of the best environmental standards in the world when it comes to the oil and gas industry.

“I know there is lots of resistance to oil pipelines in British Columbia for lots of good reasons,” said Rustad. “Any new development would be subject to those standards.”

According to the provincial government, the province’s average annual production of crude oil over the past five years was 1,240,095 cubic meters (approximately 7.79 million oil barrels) per year.

 

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