Here is another projection

Canada’s natural gas sector could emerge as an investor magnet surpassing interest in the oil sands over the next two decades, The Conference Board of Canada forecasts show.

Natural gas could attract as much as $386-billion in investments by 2035 and create 3.2 million person-years of employment (or an average of 131,460 jobs annually), says the Conference Board of Canada in a new report. This compares to $364-billion investments expected in the oil sands and equal job growth during the period, according to an earlier Board study.

“There are similar numbers on the total investment… in general we see a lot of demand for energy,” Pedro Antunes, co-author of the report, told the Financial Post. “The oil sands have already seen a lot of investments in the last few years, and going forward there will be a lot of activity, but sooner or later it will ease off as we get into production mode.”

The investment surge in natural gas will generate $940-billion in direct and indirect economic growth, including $364-billion directly to the country’s GDP over the forecast period, the Board said in a report published Monday.

British Columbia will lead the natural gas investment charge, attracting $181-billion, with Alberta garnering $154-billion from 2012-2035, the Board estimates.

The report echoes British Columbia Premier Christy Clark’s comments last week that the province’s natural gas industry will rival the oil sands in the future.

“Think about it in these terms: what oil has been to Alberta since the 1970s-80s is what LNG is going to be for British Columbia, nothing less than that,” Ms. Clark told The Canadian Press. “Energy output from LNG will likely be as big as the total energy output today from the oil sands.”

The symbiotic relationship between Alberta’s oil sands and natural gas will only strengthen in future. To fuel their rising output, bitumen producers will triple their natural gas consumption to 1,200 billion cubic feet per year by 2035.

While oil sands, power and transportation sectors will revive the country’s natural gas production, it’s British Columbia’s plans to export liquefied natural gas to Asia that would help liberate the commodity’s price.

Canadian natural gas prices are trailing near a decade-low at $2.88 per million British thermal unit, and production is falling as the U.S. — the industry’s biggest customer — is in the midst of its own shale gas revolution.

While the Board does not expect all the planned LNG projects to proceed, the new industry will need another 1,200 billion cubic feet per year of natural gas by 2035 to satisfy energy-thirsty Asian markets.

Such market access will be crucial to lift commodity prices as the oil and gas sector is currently beholden to the U.S.’s energy revolution, says Michael Binnion, president of Questerre Energy Corp., with interests in Quebec and Alberta shale deposits.

“If you take what we export to U.S. in natural gas discounts and discount on oil price, it is $20-billion to $30-billion we are sending to America in the form of subsidies,” Mr. Binnion said at an oil and gas conference last week. “If I was a citizen of Alberta or federal government and getting $30-billion less royalties and taxes…., there is reason for everybody to be concerned about infrastructure issues.”

While Alberta and B.C. will rake in majority of the natural gas royalties, taxes and revenues, Ontario and Quebec will also see their manufacturing industries benefit from the boom’s trickle-down effect.

Things could look even rosier for Quebec if the province lifts a moratorium on shale gas drilling. The Board expects Quebec to attract more than $6-billion in investment from 2020 onwards if the ban is lifted.

While the Board’s forecast is “prudent” in its assumptions, Mr. Antunes says there are other downside risks that could derail investment potential, such as LNG projects which may not go ahead — although it it unlikely.

Another key risk is a collapse in crude prices due to the North American output glut, similar to what happened in natural gas.

“There are certain risks that oil prices could be weaker and thus, investments in the oil sands, which are highly natural gas-intensive, affect a lot of the demand for natural gas,” Mr. Antunes says.

Sebastian: The PQ won a minority and as such it can say all it wants to but when push comes to shove I hope it will be the politically astute members of parliament ans backbenchers that will move things forward... That said it is still difficult to understand a society that just randomly throws party's out of power to elect some leftist that stands for the Francophone language issue and has no real party platform to address the single largest issue in Canada...that being Quebec itself and its pathetic track record for accepting and insisting on being the welfare state of Canada...ie the Greece of North America. Its time for them to stand on their own and promote business for the sake of their own future. The rest of us are just tired of babying them.

Seems like the fracking of oil shale and NG shale has a spin off affect on other resource based organizations. An interesting perspective. Maybe I'll buy shares in a frac sand mine while waiting for QEC to come around...or should i say waiting for Quebec to come around...

Oil Companies Drawn To 'Frac Sand'

05/14/2012 | 02:25pm

--Oil firms buy sand mines to ensure supplies needed for shale drilling

--"Frac sand" demand has grown 35% in average in last 5 years

--Shale drilling prompts proliferation of sand mines across the nation

This tiny corner of Texas Hill Country doesn't have oil or gas riches, but it does hold vast deposits of a granular commodity highly-coveted by energy companies: sand.

As the use of the drilling technique known as hydraulic fracturing has skyrocketed in the U.S. amid the shale boom, demand for so-called "frac sand" has also increased dramatically. Demand for sand is so acute that some large oil and gas producers, such as EOG Resources Inc. (>> EOG Resources, Inc.) and Pioneer Natural Resources Co. (PXD), have taken the unusual step of buying their own sand plants in order to secure long-term supplies and try to put a lid on high prices.

Energy companies have managed to unleash a bounty of oil and natural gas by creating fissures in shale rock with high-pressure streams of water, allowing hydrocarbons trapped within to escape to the surface. The rounded silica sand extracted from the mines here--about 120 miles northwest of Austin--and other sites around the country, is used as a "proppant"--a material that holds these cracks open.

"The need for high quality sand has never been greater than it is today," says Jerry McGee, Chief Executive Officer of Cadre Proppants, a private-equity owned company that operates one of the largest silica sand mines in Texas, which started operating in April of last year. At the mine, the sand is sorted out and classified by grain size according to the needs of oil companies.

In 2011, hydraulic operations in the U.S. used about 28.7 million tons of sand, up from 6 million tons in 2007, according to independent laboratory PropTester Inc. and Kelrik LLC, a consultancy.

But the supply of sand has had trouble keeping up with demand over the past two years and this has caused oil companies to try to secure supply by owning the sand they need, or to use less-than-ideal mesh sizes and non-traditional, lower quality sand, said Doug Garber, an analyst at Dahlman Rose & Co.

EOG, one of the largest U.S. independent oil and gas producers, decided in 2008 to operate its own sand mine and plant in North Texas after it concluded that the demand and price for sand was set to explode due to the proliferation of hydraulic fracturing, Chief Executive Mark Papa said in an interview.

Papa said the largest component of an average shale well is the hydraulic fracture treatment and sand is an essential component of the process. That "is the reason we address particular piece of the puzzle," but don't, for example, buy their own rigs, Papa said.

EOG also operates a mine and plant in Chippewa Falls, Wisconsin, that produces sand used by the company's drilling operations in Texas's Eagle Ford Shale. Part of the reason EOG's wells in that formation cost $1 million to $2 million less than other operators is because they own their own sand, Papa said. The cost of drilling a single well in the region is about $8 million, according to Oppenheimer & Co.

Pioneer's Chief Executive Timothy Dove told analysts in March that its purchase of a sand mine in Brady, Texas would save the company $65 million to $70 million a year.

Owning the mine, which provides sand for its operations in the Permian Basin, will allow Pioneer to pay $80 a ton instead of $120 a ton, the market price for brown sand. Available in Texas and Arkansas, brown sand is ideal for use in oilfields because of its bigger grains.

As energy producers move their drilling rigs from natural gas fields to more profitable oil fields, brown sand is likely to become more popular, according to experts.

The value of silica sand production exceeded $1 billion for the first time in 2010, according to statistics from the U.S. Geological Survey. Dahlman Rose's Gerber said that his firm expects "frac sand" consumption to increase 30% in 2012.

-By Isabel Ordonez, Dow Jones Newswires; 713-314-6090; isabel.ordonez@dowjones.com

This is very typical of Quebec politics. They have to do it their way and their way is not always congruent with approriate science...rather French emotion and misplaced nationalism (ie seperatism). They don't like l'anglais playing in their backyard and especially don't like l'anglais telling them how to do things. Although i am heavy into QEC I would not be surprised to see the fracturing issue placed on the shelf for a few more years.

Quebec is in no hurry when the rest of Canada is supporting its social network.

Receivd this promising message today. Things are looking up

Vitally Correct Policy Changes Announced


Clearly, the resurrection of Quebec’s former state oil company SOQUIP and a new “Ressources Quebec” fund of $1.2 billion is proof that a “Quebec Inc.” down payment for the projected private investment of $80 billion over 25 years “Plan Nord” (North of lat. 50) – for both mining and hydrocarbons speaks to the government signaling that it will be more than ready for a true oil and gas exploration and production / service industry after the Strategic Environmental Assessment re shale gas reports in late 2013. That report might come sooner than later.

Natural gas imports to QC are stated to be $15 billion per year; the QC govt. is supporting a study looking to extend Gaz Metro natural gas line to Sept Iles, which would cost $750MM;

New land regulations in oil and gas: QC is going to an auction system of Crown lands like that in Alberta and BC;

Re offshore Gulf of St. Lawrence, the budget states that QC will create royalty rates and rules, now being studied with the goal of being consistent with Newfoundland and Labrador. This telegraphs that SOQUIP and Nalcor will be partners in the massive Old Harry structure (Corridor Resources) after all.

Much higher annual fees, shorter lease times (were 10 years) is what was lacking --- now clearly QC is getting ready for an oil and gas drilling boom starting in 2014, driven by Quebec Inc.

Depending on when the Premier goes to the Lieutenant-Governor, all this could be fast forwarded by one year -- to spring of 2013.

So those who pick up oil and gas acreage and/or interests in QC companies now will be doing so at a small fraction of what it will cost to do so not that long from now. Junex - JNX – V was up 16% today. Corridor is at 99 cents is well off its lows of 70 cents but still down over 90% from its all time high.

In our opinion, the worst is well behind the oil and gas sector in Quebec. Our view is that first drilling will occur in Utica Shale Anticosti Island (281 residents) which has important similarities to the rich wet Utica shales in Ohio; and the island and is well North of 50°.
Junex, Corridor, Petrolia are the Anticosti Island players.

March 21, 2012

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