Australian Oil and Gas company Calima Energy Limited (Calima) has undertaken a strategic review of current and near-term investments in gas pipeline capacity relevant to the Montney Formation in Western Canada.
“Calima is fast approaching the point where it will be drilling its first wells on the Calima Lands and it was therefore considered prudent to review the factors affecting the market both in terms of price and ease of access to infrastructure,” commented Calima Energy Managing Director, Alan Stein. The review identified over C$70 billion (approximately A$72 billion) of proposed infrastructure investments which have the potential to add over than 8 bcf per day of new gas pipeline capacity (effectively more than double the export capacity of the basin).
The basin’s productivity has run ahead of its pipeline capacity, meaning producers must compete for access to markets in the eastern regions of Canada and the US, consequently gas from the Montney is currently selling at a significant discount to the US benchmark prices.
“The analysis confirms our belief that the introduction of new pipeline capacity and new markets should have a positive impact on regional gas prices and the increased demand for diluent by the heavy oil producers should result in premium pricing for Montney condensate being maintained in the future,” Stein said.
According to Calima, the introduction of new infrastructure will ‘ease pressures’ on producers, as well as introduce access to international markets via LNG. The company has also stated the forecast for increasing gas prices combined with growing demand for condensate is predicted to produce a ‘positive impact upon positive impact upon Montney producers and demand for acreage.’
“With a positive outlook on infrastructure and its flow-on effect on pricing, this is an exciting time to be bringing the Calima Lands towards production.”
More information on the project can be found here.