1. British Columbia - A Leading Canadian Oil and Gas Province
Once again, we’re happy to be here representing British Columbia here at the AAPG Annual Convention. Investors have recognized Canada as a new “energy superpower” and the province of British Columbia is a big part of that.
2009 AAPG Annual Convention and Exhibition
International Pavilion Theatre
Prospect Promotion Session
June 9, 2009
Denver, Colorado
Christopher Adams AScT
BC Ministry of Energy, Mines and Petroleum Resources
Resource Development and Geoscience Branch

2. Map of Canada Vancouver Victoria British Columbia Canada Canada
Canada’s Pacific Gateway - British Columbia is the western-most province in Canada.
3rd largest province in Canada with a population of around 4.4 million (
Vancouver is the largest city.
The provincial capital is the city of Victoria located at the southern tip of Vancouver Island. The BC Ministry of Energy, Mines and Petroleum Resources is located here.
British Columbia
Canada
United States
Mexico
United States
Mexico

3. B.C.’s Oil and Gas Connectivity
British Columbia is a reliable and environmentally responsible energy supplier
Well connected to North American markets
2nd largest provider of natural gas in Canada
4th largest oil producer
BC is well connected to North American natural gas markets and is a key corridor for several proposed pipelines. We are a secure, stable and reliable energy producer.
Total Oil and Gas Revenue:
$2.14 billion (2006)
$2.36 billion (2007)
$4 billion (2008)

4. Oil and Gas Resource Map
Commercial oil and gas production occurs in northeast British Columbia within the Western Canada Sedimentary Basin (55° to 60 °N)
Well developed infrastructure with extensive road and pipeline network
Other areas in province contain significant quantities of sedimentary rock that may yield future production in (e.g. interior basins, coalbed gas areas)
WCSB extends into the northeast section of the province.
large undeveloped reserves, established infrastructure, ready service sector in the northeast
oil and gas development strategy includes a competitive taxation and royalty structure
the province works very closely with industry and stakeholders to ensure responsible development

5. Oil & Gas Production and Reserves
Raw Natural Gas Production over 1.1 Tcf
Crude Oil Production over 8.5 million barrels
2007 Reserve Numbers
Natural Gas (remaining marketable reserves) 14 Tcf with a reserve to production ratio of 16.4 years
Oil (remaining established reserves) 124 million barrels
with an R/P ratio of 12.9 years
Raw natural gas production in BC was 1.1 Tcf in 2008, roughly 3 Bcf per day.
Our crude oil production was 8.5 million barrels in 2008.
Reserve Numbers:
Natural Gas (remaining marketable reserves) 14 Tcf with a reserve to production ratio of 16.4 years
Oil (remaining established reserves) 124 million barrels with an R/P ratio of 12.9 years

6. As I mentioned earlier, the northeast section of the province is the only area where reserves are recognized. This particular chart demonstrates the success that exploration and production companies have had in converting BC’s undiscovered natural gas resources into established reserves.
BC’s remaining raw gas reserves have increased steadily since 1997 and, of course, the consistent nature of the R/P ratio is a key measure of sustainability.

7. Petroleum and Natural Gas Rights
90% of petroleum and natural gas rights are owned and administered by the Crown
Dispositions, by public tender, are held monthly
Parcel postings based on industry requests
Variable tenure options available (permit, drilling
licence, lease)
Petroleum Titles Online at:
BC MEMPR is responsible for: issuing rights, administering rights, collecting and accounting for related oil and gas revenues.
Dispositions, by public tender, are made once each month. Parcel postings are based on industry requests and variable tenure options are available such as a permit, drilling
licence or lease.
Permits - carry an obligation to conduct exploration
Drilling Licences - convey the exclusive right for permission to drill oil and gas wells in a defined area
Leases - allow production in addition to providing exclusive drilling rights.
Tenure details posted at:

8. Record!
2008 was an exceptional year for PNG rights in the province with a record $2.66 billion in bonus totals. In fact, since 2001, there have been several record bonus totals established from the sale of PNG rights.
Producer interest in shale gas potential (Horn River, Cordova Embayment, Upper Montney Play Region) has played a significant part in the surge, particularly in 2007 and 2008.
Just as a side note, for the first time ever BC’s land sale bonus totals for 2008 were higher than totals collected in Alberta (more than double, in fact)

9. TOTAL BONUSES IN 2008 = $2.66 BILLION
Distribution of 2008 Land Sale Bonuses in British Columbia Shale Gas Regions Dominate!
In 2008, shale gas regions dominated in terms of land sale activity. 90% of BC's PNG rights were sold in the Horn River Basin, Cordova Embayment and the Montney Play Region.
TOTAL BONUSES IN 2008 = $2.66 BILLION
Shale Gas Regions = 90%

10. Gas prone province. Over 80% of wells drilled are given a gas status
Gas prone province! Over 80% of wells drilled are given a gas status. There is drilling for oil (between 5% and 10% of all wells)
We saw a record number of wells drilled in 2005 (1,429). As you can see, 919 wells were drilled last year.
We’ve seen consistent drilling growth since 1995.
And, we’ve also seen summer drilling increase in the province by almost 200% between 2002 and BC’s Summer Drilling Royalty Program and improved road access are a couple of reasons behind that.

11. Resource Numbers
Conventional Gas Resource Potential - Undiscovered all basins
93 Tcf
Unconventional Gas Resource Potential
300 Tcf of tight gas
250 Tcf of shale gas
100 Tcf of coalbed gas
Unconventional Gas:
Undiscovered conventional resource potential for all basin in British Columbia is 93 Tcf.
Tight gas is currently being targeted in basin centered resource play developments.
Industry interest in shale gas is high - several exploration projects are underway
Provincial government is facilitating the development of coalbed gas – over 90 wells drilled to date

12. Active Established Plays
Complex and Rich Geology
Jean Marie
Mississippian
Triassic
Cretaceous
Deep Basin Gas – sweet spots
Fort St. John Region
Selective Foothills
Active Established Plays
Over the last decade, the Upper Devonian Jean Marie has become major target for operators. Jean Marie carbonate shelf has been developed by horizontal drilling over large areas north of Fort Nelson in the Greater Sierra region.
Triassic-aged targets are the most prevalent in the lower half of NEBC’s oil and gas region (37 – 40%). These include targets in the Pardonet/Baldonnel, Charlie Lake, Halfway, Doig and Montney.
The Deep Basin region offers thick sequences of stacked, regionally extensive, gas-saturated, clastic reservoirs. Traditionally, exploration has focused on identifying stratigraphic sweet spots that feature conventional reservoir quality in the Lower Cretaceous. Considerable resource potential exists in the tight gas component of the region such as the Cretaceous Cadomin in the Cutbank Ridge area.
The Fort St. John region continues to be the hub of activity and production for the province. The region has a variety of geological settings offering good quality oil and gas prospects with stacked, multi-zone potential. On the western side of the region, Laramide-induced folding and structural trapping provides opportunity for Debolt, Halfway, Charlie Lake, Baldonnel, and various Cretaceous sands
The Southern Foothills region has seen prolific production from fractured Triassic Baldonnel, Halfway and Charlie Lake formations. New highly productive wells tap deeper Pennsylvanian to Permian Stoddart Belloy sections along the western margin of the Foothills.

13. Complex and Rich Geology
Regional Hydrothermal Dolomite (HTD)
Slave Point, Wabamun, Debolt
Shallow Gas
Spirit River/Notikewin
Deep Basin – Tight Gas
Cadomin/Cutbank Ridge
Northern Foothills
Triassic & Debolt Cypress/Chowade/Muskwa-Kechika
Liard Basin
Nahanni/Mattson
Active Emerging Plays
Fault-associated hydrothermal dolomite reservoirs are a key component of Devonian exploration potential in NEBC. We see this in the Slave Point, Wabamun, Debolt - Hydrothermal dolomitization is defined as dolomitization under shallow burial depths by saline water at temperature and pressure greater than the ambient temperature and pressure of the host limestone.
Shallow Gas - Spirit River/Notikewin Play Lowstand Notikewin sands – We see hundreds of new gas wells in zones above the traditional producing horizon north of Peace River Block.
Deep Basin The tight gas component of the Deep Basin offers a huge potential resource that is now being exploited. Development of the Cadomin was initiated in 2004 and production continues to come on stream today.
Northern Foothills - Cypress/Chowade areas – exploration and development of the Triassic Baldonnel, Charlie Lake and Halfway and the Mississippian Debolt. Potential exists for large thrust fault and anticline structures as well as deeper reef and bank edge developments. The Muskwa-Kechika area falls within the BC Foothills structural trend. Muskwa-Kechika Management Plan – October New tenures will not be issued without preparation of a pre-tenure plan. Oil and gas exploration and development is prohibited in all protected areas within the Muskwa-Kechika Area.
Liard Basin and Fold Belt Region - Potential hydrocarbon objectives can occur in the Devonian Dunedin/Nahanni Formation, the Mississippian Banff, Debolt, and Mattson formations, and the Cretaceous Chinkeh and Scatter formations. The Nahanni holds significant potential in dolomitized reservoirs in the structural belt. The Debolt, Mattson, Kindle, Fantasque, and possibly the Triassic Grayling and Toad formations are potential objectives in structural closures on the Bovie Lake structure on the margin of the basin.

14. Shale Gas in British Columbia
Industry interest in shale gas is high in northeast BC – testing of several units ongoing; production has just begun
Two studies released on Devonian and Triassic Shale Gas Potential – copies available at our booth (International Pavilion #2241)
New net profit royalty scheme is applicable to shale gas
Many prospective shale gas horizons with good TOC, thermal maturity and moderate porosity:
1. Lower Mississippian and Upper Devonian horizons in the Besa River, Exshaw, Fort Simpson/Muskwa. Other Devonian shales in the Horn River Basin and Cordova Embayment
2. Triassic Doig play at Groundbirch (within Montney play trend)
3. Upper Montney play in the Swan, Bissette and Dawson areas (within Montney play trend)

15. Emerging Shale Gas Plays
Horn River Basin
North of Fort Nelson
Potential in Devonian strata - primary targets are Muskwa/Evie
Large active producers including EnCana, Apache, Devon, EOG, Nexen, ExxonMobil Canada - all active with experimental scheme approvals and drilling.
OGIP 250 to 500 Tcf
Montney Play Trend
Unconventional tight gas/shale distributed over an area extending from north central Alberta to the northwest of Fort St. John in British Columbia
Primary focus is on the Upper and Lower Montney using horizontal drilling techniques
Active producers include Arc Energy Trust, Murphy Oil, EnCana, Duvernay Oil Corp.
OGIP 35 to 250 Tcf
Hot New Shale Gas Plays: HRB & Montney
Recoverable resource numbers are a sliding scale depending on advances in technology (horizontal drilling and hydraulic fracturing play a key role in unlocking these resources)
Horn River Basin - North of Fort Nelson Potential in Devonian strata - primary targets are Muskwa/Evie. Large active producers include EnCana, Apache, Devon, EOG, Nexen, ExxonMobil Canada - all active with experimental scheme approvals and drilling. OGIP 250 to 500 Tcf.
Montney Play Trend - Unconventional tight gas/shale play is distributed over an area extending from north central Alberta to the northwest of Fort St. John in British Columbia
Primary focus is on the Upper and Lower Montney using horizontal drilling techniques
Active producers include Arc Energy Trust, Murphy Oil, EnCana, Duvernay Oil Corp.
OGIP 35 to 250 Tcf

16. PNG Rights Sales in Shale Gas Plays
Excellent indication of companies assembling exploration acreage in these areas. Dramatic increase in petroleum and natural gas rights sales in both the Horn River and the Montney since Well over the $1 billion mark in 2008 for both plays.

17. B.C. Government Support Lower royalties Reduced regulations
Improved road access
High quality geoscience information
Full access to drill core and cuttings for all wells
Favourable royalty regime (no immediate plans to change royalty structure)
Have worked hard to streamline regulations in the province and provide a stable regulatory framework.
Road access has improved measurably, particularly in the far northern regions of the province.
High quality geoscience information publicly available.
Core Facility is in Charlie Lake, BC - provides a central storage warehouse and research examination facility for core recovered from drilling operations.

18. Royalty Incentives
Existing royalty reductions for deep gas, marginal plays (e.g. small or shallow pools), coalbed gas, summer drilling
New net profit royalty - small royalty on production before payout of capital investment
Infrastructure Royalty Credit Program for roads and pipelines
A number of targeted royalty programs are in place: Summer Royalty Program - Marginal Royalty Program - Deep Royalty Program - Coalbed Gas Royalty Program
The Net Profit Royalty Program consists of a small gross royalty levied on production before payout of the capital investment, and thereafter a higher royalty rate applied to the net or gross revenue. This program applies to unconventional reservoirs that cannot be produced at economic flow rates, or that require assistance from massive stimulation treatments or special recovery processes. Intention is to stimulate development of high-risk projects such as shale gas, coalbed gas, tight gas, enhanced gas or oil recovery, remote gas and hydrates.
The Infrastructure Royalty Credit Program helps facilitate an increase in oil and gas exploration and production in under-developed areas of the province. It also extends the drilling season in providing year-round access.

19. Infrastructure
Since 2004, over $315 million in royalty credits allocated to oil and gas companies.
Since 2004, the province has invested more than $176 million in public road improvements resulting in 72 new road-based projects and 53 new pipeline projects.
A couple of examples of dedicated infrastructure programs, which are in place to support further exploration and development activity.

20. State of Oil and Gas Industry in B.C.
Capital Spending by Industry in 2007
$5.5 Billion
Public Road Improvements since 2004
$176 Million
Total Sales Value of Oil & Gas Production in 2008 Over $8.6 Billion
Oil and gas investment profile in the province is strong…

21. Visit us on line at www.em.gov.bc.ca
Information on British Columbia’s oil and gas industry is available in this brochure.
More details at our booth: Check out “British Columbia Oil and Gas 2009 Yours to Explore”
We’re at booth 2241 here in the International Pavilion
Booth IP 2241
Visit us on line at