1. British Columbia - A Leading Canadian Oil and Gas Province
Once again, we’re happy to be here representing British Columbia here at the NAPE Expo. Investors have recognized Canada as a new “energy superpower” and the province of British Columbia is a big part of that.
2008 AAPG Annual Convention and Exhibition
International Pavilion
April 21, 2008
San Antonio, Texas

2. Vancouver Victoria British Columbia Canada Canada United States Mexico
Canada’s Pacific Gateway - British Columbia is the most western province in Canada.
3rd largest Large province in Canada with a population of just under 4.4 million in 2007 (
Vancouver is the largest city.
The provincial capital is the city of Victoria located on Vancouver Island.
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 markets
2nd largest provider of natural gas in Canada
4th largest oil producer
Well connected to markets! We are a secure, stable and reliable energy producer, which is significant in today’s world of uncertainty and volatility.
Total Oil and Gas Revenue - $1.5 billion (2006) $1.38 billion (2007)

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 competitive taxation and royalty structure
Work very closely with industry and stakeholders to ensure responsible development

5. 2006 Oil & Gas Production and Reserves
Annual Production
Raw Natural Gas Production over 1.1 Tcf
Crude Oil Production over 10 million barrels
Reserve Numbers
Natural Gas (remaining marketable reserves) 13.5 Tcf with a reserve to production ratio of 16.5 years
Oil (remaining established reserves) 115 million barrels
with an R/P ratio of 11.2 years
Reserve Numbers - A consistent nature of an R/P ratio is a key measure of sustainability and demonstrates the success that exploration and production companies have had in converting BC’s undiscovered resources into reserves.

6. Reserve numbers for 2007 not released yet.
Huge growth in 2004 & 2005 is related to large number of reserve revisions not to additions by drilling. There is still a significant lag in the reserve evaluations. A lot of the 2004 reserve additions can actually be attributed to drilling in 2003 and even It is an artefact of when the evaluations were performed not when the drilling occurred.

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.
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. It’s been an exceptional year for PNG rights in the province with a record $1 billion in bonus totals. In fact, since 2001, several record bonus totals were established from the sale of PNG rights in the province. Producer interest in shale gas potential (Horn River, Cordova Embayment, Upper Montney Play Region) played a significant part in the surge, particularly in 2007.

9. Record drilling achieved in 2005.
Consistent drilling growth over last decade and a half. Summer drilling increased 230% between 2002 and 2006
Gas prone province! Over 80% of wells drilled are given a gas status. There is drilling for oil (between 5 and 10%)
901 wells drilled in 2007

10. Resource Numbers Undiscovered Resource Potential (all basins) 95 Tcf
Unconventional Gas Resource Potential
300 Tcf of tight gas
250 Tcf of shale gas
84 Tcf of coalbed gas
Unconventional Gas:
Tight gas is currently being targeted in basin centered resource play developments
Industry interest in shale gas is high - several exploration projects have been undertaken
Provincial government is facilitating the development of coalbed gas – 87 wells drilled to date

11. 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
Within the last 10 years, the Upper Devonian Jean Marie has become major target for operators. Jean Marie carbonate shelf 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 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 (e.g. Cadotte and Falher).
The Fort St. John region continues to be the hub of activity and production for the province. 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

12. 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/M-K
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/Notikewan Play Lowstand Notikewin sands - Hundreds of new gas wells in zones above 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 – expl 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.

13. Shale Gas in British Columbia
Industry interest in shale gas is high in northeast BC – testing of several units ongoing; production has just started
Two recent studies released on Devonian and Triassic Shale Gas Potential – copies available at our booth (IP6)
New net profit royalty scheme to be applicable to shale gas
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.
Doig play in Groundbirch
Upper Montney play in the Swan, Bissette and Dawson Creek areas.

14. British Columbia – Shale Gas Hot Spot
In 2007:
A total of 595,559 hectares were disposed
Average price of $1,758/ha
Total bonuses of $1.05 Billion
Of this: $928.7 Million may have been attributed to shale gas plays

15. Why is Shale Gas in NEBC so HOT?
Enormous potential
Industry interest high
Testing of several units ongoing
Proven production (Upper Montney)
New net profit royalty scheme will be applicable
In BC, the province’s Oil and Gas Commission has approved more than 20 blocks of potential shale lands as experimental scheme areas. Wells drilled within the boundaries of areas receiving this regulatory designation remain confidential for three years versus one year for normal wells (New Technology Magazine Oct/Nov 2006 p.15)

16. Devonian – Horn River Basin/Cordova Embayment
Muskwa/Evie are primary targets
Apache, Devon, Encana, EOG and Nexen all active with experimental schemes
HRB focus for activity and sales – Cordova new play area for 2007

17. Devonian – Horn River Basin

18. Devonian – Cordova Embayment

19. SOURCE:

20. Triassic – Upper Montney play
The Upper Montney has seen exceptional growth in production from ~26 MMcf/d in 2005 to > 80 MMcf/d in 2007

21. Triassic – Upper Montney play
Play area was defined by 2006 Open File Report
The Upper Montney play area had a total bonus of $526 M in 2007

22. Geoscience Releases
SHALE GAS POTENTIAL: CORE AND CUTTING ANALYSIS
Petroleum Geology Open File 2007–01
Compilation of non-confidential core analysis data from various wells.
Contains more than 4 GB of data scanned and compiled relating to potential shale gas units in NEBC.

23. Geoscience Releases Also Available:
OIL & GAS EXPLORATION ACTIVITY REPORT 2006
Information Circular 2007 – 01
A compilation of BC’s Oil and Gas activity for 2006.
Provides a summary of the exploration, production, growth and decline of activity by geographic areas and geology
Regional “Shale Gas” Potential of the Triassic Doig and Montney Formations, Northeastern British Columbia
Petroleum Geology Open file
Gas Shale potential of Devonian Strata, Northeastern British Columbia
Petroleum Geology Special Paper

24. 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
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.

25. 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
Royalty Credit Program for roads and pipelines
Summer Royalty Program - Marginal Royalty Program - Deep Royalty Program - Coalbed Gas Royalty Program
The Net Profit Royalty Program will consist 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. Net Profit will apply to unconventional reservoirs that cannot be produced at economic flow rates, or that require assistance from massive stimulation treatments or special recovery processes; high-risk projects. This includes: shale gas, coalbed gas, tight gas, enhanced gas or oil recovery, remote gas and hydrates

26. Infrastructure
More than $390 million in new infrastructure investment in the province
Allocated over $215 million in royalty credits to oil and gas companies
Developed 62 new road-based projects and 39 new pipeline projects
In keeping with the BC Government's overall strategic direction, dedicated infrastructure programs are in place to support further exploration and development activity.
BC’s royalty regime is structured to maximize the amount of economic rent collected from energy producers, while ensuring that these producers are able to earn fair return on their investment.

27. State of Oil and Gas Industry
Capital Spending by Industry in 2006
$6.1 Billion
Public Road Improvements since 2004
$174 Million
Total Sales of Oil & Gas Production in 2006
Over $7 Billion

28. 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 2008 Yours to Explore” Booth IP6
Booth IP6