Did we get picked up Nationally?
Jeff Rud
Victoria Times Colonist
A Vancouver Island-based company says it is only weeks away from beginning to drill for methane gas in coalbeds north of Courtenay.
The project will represent the first commercial extraction of coalbed methane in B.C. and the beginning of what Priority Ventures Ltd. president Neil Swift believes could eventually become a half-billion-dollar-a-year industry on the Island.
Priority Ventures applied to the B.C. Oil and Gas Commission for its first test production well permit last month. The company expects to receive the permit by the end of this month at the latest.
Swift said the company has already engaged Aggressive Diamond Drilling of Kelowna, with a truck-mounted rig, to do the work.
"Realistically, I think we're at least a couple of weeks away,'' said Swift in an interview this week from the company's Courtenay office. "But the rig is ready to roll as soon as we get the permit in hand.''
Oil and gas commission spokeswoman Colleen Sweet confirmed that the Fort St. John-based commission received Priority Ventures' permit application on Oct. 17. She said the commission was going through the review process, which included a review of public consultation, environmental, technical and engineering reports, but couldn't estimate how long that process will take.
Priority Ventures began test drilling coalbeds north of Courtenay in July and decided to apply for the permits after finding signs of encouraging levels of methane, essentially a pure form of natural gas.
Swift said he hopes to have at least the first well on production by the end of the year.
The company is also planning to file a second well application with the commission within the next few days, with a third and fourth to follow soon. All four wells will be located within eight kilometres of the city limits of Courtenay, with three in the Dove Creek area and one north of Royston.
"At least we'll get licenses for four (wells), so that we are able to drill while the rig is here,'' Swift said.
The company will have to evaluate production over a six-month period, but Swift believes that single wells in the area will be capable of producing at least 300 mcf (one mcf equals 1,000 cubic feet) of methane per day. The average household uses about 110 mcf of natural gas per year.
If the initial wells produce as expected, Swift said his company plans to have about 60 wells in production by the end of 2003. At an average production of 300 mcf per day, Swift said those wells would be capable of gross revenue of $42 million a year.
"We like to think this will (have a big economic impact on the area),'' Swift said. "But that remains to be seen.''
Priority Ventures has locked up oil and gas rights for more than 8,000 acres in the Courtenay area. Swift said other companies are also securing such rights and he potentially sees hundreds of methane wells operating on the Island between Nanaimo and Courtenay.
Sweet said the oil and gas commission has not received any other methane well applications for the Island.
Coalbed methane is the natural gas found in most coal deposits. It is created during the process by which plant material is converted into coal over millions of years. Coalbed methane is a clean-burning fuel, considered more environmentally friendly than oil, coal or conventional natural gas. It requires minimal processing.
Usually coalbed methane consists of pure methane but it may also contain carbon dioxide and nitrogen. It is contained within the coal seam, where it is attached to the coal. Pressure from overlying rock and water within the coal fractures keeps the methane within the coal.
In coalbed methane extraction, a steel-encased hole is typically drilled into the coal seam. Then a fluid, sometimes a water-based nitrogen foam, is pumped down the well bore and into the seam in a process known as fracturing. The fluid widens the existing fractures, allowing methane gas and water to flow to the surface. The gas and water are then separated at the surface.
Although there is currently no commercial production of coalbed methane in B.C. and very little in Canada, the U.S. derives more than eight per cent of its annual natural gas production from this source.