Spectra Energy is responding to impressive production growth in the Montney natural gas formation with a pair of new projects in the Dawson Creek area of northeast British Columbia.
The new Bissette Pipeline began to flow on April 6 of this year, connecting raw natural gas production in the South Peace to the South Peace Pipeline - which itself was only built in 2009 and brought into service in 2010 - on its way to Spectra's McMahon Gas Plant in Taylor, B.C. The Bissette Pipeline will also be tied into the gathering system for the new Dawson Processing Plant upon completion of that facility's first phase of construction, which should be in the fall of 2011.
"The plant is being located in the Montney region, which is a very prolific play," said Rosemary Silva, Team Leader for External Relations and Public Affairs with Spectra, discussing the need for the Dawson Processing Plant. "So, the area's seen a lot of growth in production. A processing plant was required to ensure that the gas isn't locked in to the area and it can be processed and shipped to the market. We were responding really to customer demand. The plant is fully contracted. We don't build plants on spec. We build to meet firm contracts. So, that's the impetus behind the construction of the plant."
The plant - which was approved by the National Energy Board (NEB) on January 31, 2011 - is being constructed in two phases. Each phase will have a capacity of 100 million cubic feet (mmcf) per day of raw natural gas. Phase two construction will begin after the completion of phase one later this year and then should be in-service in the first quarter of 2013.
"It will be 200 [mmcf] in total," said Silva. "And just to kind of give you a sense of what that translates to, the plant will produce enough gas to supply an average of 2000 homes per day. So, in a year, it's about enough for 700,000 homes."
The plant is being constructed on agricultural land owned by Spectra, which minimizes the impact on the forest and resident wildlife. There was some opposition to the site that was proposed initially. So, Spectra chose to move the plant seven kilometres south of that original site in response to the concerns of local landowners and other stakeholders.
"We definitely take land stewardship really seriously in all of our projects, right from siting a new project through to decommissioning a project," said Silva. "We try to minimize any disturbances and environmental footprint."
An element of that initiative is eliminating redundancies in their operations.
"We really try to build where we have existing infrastructure, to minimize our environmental footprint," she added. "We take our environmental performance very seriously. We actually have a really good record on that front. And that is paramount in all of our operations."
The new Dawson plant will process raw natural gas, extracting CO2, H2S and natural gas liquids from the methane, which will subsequently be transported to the NGTL Groundbirch Pipeline. The CO2 and H2S that is extracted at the plant will be blended with raw gas and sent to the McMahon Gas Plant via the South Peace Pipeline so the new facility doesn't require its own sulphur recovery and injection facilities.
Peak construction should require approximately 300 workers.
"We do very much strive to involve local contractors and suppliers in our activities, assuming that they're safe, competent and competitive," said Silva, addressing how Spectra intends to satisfy their construction and staffing requirements. "So, we do have a very robust program for local content."
That commitment to local content includes hiring from First Nations communities. During February and March of this year, construction of that plant included 2160 man-hours from First Nations workforce and 1092 man-hours from First Nations contractors.
After it comes online, Spectra will be staffing the facility 24/7 with 18 to 20 full-time employees. It will contribute about $350,000 per year in property taxes to the Peace River Regional District.
This is likely just the beginning for expansions to Spectra's operations in northeast B.C. Indeed, Spectra is currently building a new processing facility in Fort Nelson in addition to new facilities that are planned for the Fort St. John area.
As Silva explained, the Montney play has played a significant role in these expansions, as it contains an estimated 450 trillion cubic feet (tcf) of natural gas resources. Also, production in 2006 was just 50 mmcf per day, while current production has eclipsed 700 mmcf per day.
"I think the growth in the Montney area and even the Horn River has been phenomenal in the last while," said Silva. "But, as I said before, we build not on spec, but to meet customer demand. So, all of our facilities are in response to open seasons that we had with customers and as a result of contracts. From that perspective, we're building to meet demand that we know of. One of the advantages of our facilities is we can grow organically and we can grow in increments, as opposed to having to do new developments all the time. We can just tie into the existing infrastructure based on increased demands from customers."
According to Silva, Spectra has had no difficulty managing that demand or the pace of development in the Northeast.
"The development of the Montney has really allowed Spectra Energy to expand our Fort St. John area business," she continued. "In 2009 and 2010, we added about 300 [mmcf] a day of capacity to our processing assets, about 155 [mmcf] a day in pipeline capacity. Further development in the Montney obviously led to the development of our Dawson Plant and the Bissette Pipeline. We fully expect further gathering and processing expansions in the area to unlock that potential there, meet customer demand, and get that gas to market."