Wednesday, January 25, 2012

Oil in BC

People have often spoken about the potential of offshore oil in BC, but what is not talked about is the oil potential of other areas of this province.

Offshore the estimate is that there is about 10 billion barrels of oil available in BC.   From that alone BC would have the 20th largest oil reserves in the world.  Brazil's Tupi oil field, only discovered in 2006, is of a comparable size and considered a major find.    Even though BC offshore oil is a globally significant amount, it is such a political hot potato that it is highly unlikely to be developed anytime soon.

Offshore oil is not the only oil reserve in BC, there are two other significant basins with oil reserves - the Bowser and the Nechako.  The BC Government has a long list of studies of these two sedimentary basins and their oil and gas potential.

The Bowser basin is in north western BC has an estimated 2.5 billion barrels.   The Nechako basin, covering the area bounded by Highway #16, the Coast Mountains and the Fraser, is estimated to hold 5 billion barrels of oil. With these reserves, BC has oil reserves not much smaller than the US.  The nature of the geology in these two basins has lead people to avoid seriously looking for oil and gas in them, but as technology has changed, the likelihood that they will be developed is rising.

The Bowser basin is far enough north and remote enough that it is not likely to be developed anytime soon, though with the development of the Highway #37 corridor and a deep water port in Stewart, it might get attention sooner that I expect.  

This leaves us with the Nechako basin.

If one were to develop the Nechako basin oil resource and produce 300,000 to 400,000 barrels of oil per day, this would increase Canada's oil production by about 10%.   This would also require a pipeline to the coast somewhere, one that is around 2/3s the size of the Northern Gateway pipeline.   Both Kitimat and Vancouver could make sense as terminals for the oil.

This scale of production would bring in annual gross revenues at current prices of around $10,000,000,000 to BC.   A significant portion of that revenue would flow to the provincial government as taxes.   It would also offer the communities hardest hit by the mountain pine beetle a transition era till the forests have regenerated enough to harvest again.  It is important for everyone to understand there are very significant political upsides to developing the Nechako basin.

I am highlighting all this to make people sit back and consider what else could be coming vis a vis oil production.   My hope is to pull people away from their single minded obsession with the tar sands and consider a bigger picture of the impact of oil and gas.   Oil exploration in BC is going to increase and is going to happen in these two basins, now is the time for people to consider how they will respond. 
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