Wells in the Montney and Duvernay formations in northern Alberta and British Columbia will increasingly dominate natural gas production in the provinces, TransCanada Corp.'s Nova Gas Transmission Ltd. (NGTL) said in the second pipeline expansion proposal to regulators in a week.
The North Corridor Expansion Project would tap the two formations and Alberta’s Deep Basin, where liquid byproducts make horizontal drilling and hydraulic fracturing pay despite low gas prices, NGTL said.
In the second construction application to the National Energy Board in only days, TransCanada said its western gas collection network "expects conventional supply to continue to decline over time, with supply contributions from unconventional plays to increase." NGTL's pair of projects would add up to a C$1.14 billion ($855 million) in facility additions scheduled for completion by April 2022.
North Corridor includes 81 kilometers (50.3 miles) of pipe and a compressor for C$632 million ($474 million). The companion Edson Mainline Expansion would install 85 kilometers (52.8 miles) of pipe for C$509 million ($377 million).
While the Edson Mainline would serve southern markets, North Corridor would flow gas to the northeastern Alberta oilsands, where NGTL forecasts consumption by thermal extraction plants to grow by 31% to 3.4 Bcf/d as of 2030.
"Lower long-term expectations for oil prices have tempered growth in the oilsands sector," NGTL said. "However, producers have responded to commodity price shocks with efficiencies such as brownfield expansions, debottlenecking, improving technology and industry consolidation."
The continuing rise in oilsands gas demand comes from established production sites. "Once operational, projects have relatively low cash costs and long reserve lives, making this sector a stable and growing market," NGTL said.