Not many folks outside of Alberta pay much attention to Grande Prairie, a northern outpost tucked away in the bush about 450 kilometres northwest of Edmonton. Even within the province, the growing city of more than 60,000 keeps a low profile — but that's about to change.
Across the province, another frontier town, Fort McMurray, knows what's coming. When 170 billion barrels of oilsands bitumen were reclassified as official oil reserves in 2003, the recognition put northern Alberta on the map as a serious global petroleum player.
Canadians have since been inundated with talk of the oilsands, whether it's the economic benefits, the "dirty oil" label or the inescapable pipeline politics. Early last decade, though, it was the sheer size of the reserves that had an oil-hungry world just whispering the number, 170 billion barrels, for fear anything louder might spook away the oil in the ground.
Instead of fretting over dwindling supplies of fossil fuels, the discussion is now about peak demand, meaning big reserve numbers no longer capture the mainstream imagination. It's in this new world order that the next big thing for Canada's energy industry has quietly arrived.
Like the oilsands, the industry has long known about the Montney formation, which stretches 130,000 square kilometres in a football-shaped diagonal from northeast British Columbia into northwest Alberta.
Underneath this huge tract of land, the National Energy Board (NEB) estimates there's 90 billion barrels of oil equivalent (boe), most of it natural gas. That's more than half the size of the oilsands, yet the Montney has received only a fraction of the attention, at least from the public at large. For oil and gas types, the gold rush is already on.
Output from the Montney has doubled since 2012 and now comprises a third of Western Canada's natural gas production. By 2040, the NEB projects it will make up more than half of the country's production, a future that would make the energy industry positively giddy, if only it were guaranteed.
Every issue that threatens to derail the ambitions of Canada's oil and gas industry — access to market, First Nations land rights, public acceptance of infrastructure projects and, especially, the climate consequences of burning fossil fuels — is writ large in the Montney.
Even so, it's the one bet a financially strapped industry remains willing to place. In the next four years, natural gas producers are expected to spend more than $34 billion on drilling and completing wells there, according to an estimate from FirstEnergy Capital.
Throwing a staggering pile of cash at one place to drill thousands of new wells may go smoothly. More likely, though, the conflicts currently playing out in the oilsands, NEB hearing rooms and along proposed pipeline routes are about to get a new front line.
Arguably no one knows the pending opportunity or opposition in store for the Montney better than Pat Carlson, the chief executive of Seven Generations Energy.
His company, which only four years ago produced 4,000 boe per day, is now the de facto face of the Montney after its production climbed to more than 100,000 boe per day. The trajectory of this still relatively unknown company, which itself spent $1.1 billion around Grande Prairie last year, underscores the Montney's economic potential, as well as how it could hijack Canada's climate change agenda.
Among the world's largest gas plays, the Montney is comparable to the Marcellus, the Utica, the Eagle Ford and the rest of the flagship names that make up America's natural gas revolution. Beyond size, its geology is also changing the economics of Canadian gas production.
Whereas 10 years ago, finding gas in an underground zone that spanned five metres was considered a tidy score, the evolution of fracking means Montney drillers are tapping zones with a thickness of 100 to 300 metres. It's a bona fide jackpot, but it still doesn't mean the industry can rest easy.
U.S. natural gas output is up so much that the Canadian industry is now fighting to defend its traditional markets in Central Canada from interloping cross-border competitors. Even if Canada wins this fight, which isn't a lock, the next hurdle is finding more customers for Montney gas.
At a time when protesters are stopping NEB hearings and activists are blocking a pipeline project in North Dakota, Carlson says the oilpatch needs to forget about the old ways of doing business. Those who insist on putting the words social licence into air quotes, he believes, are part of the problem.
Hearing him talk is like listening to a revival tent preacher, only instead of faith he's proselytizing for belief in the natural gas industry.
"You just can't say, 'I'm good at making buggy whips and I've always made buggy whips,' when buggy whips are no longer required," Carlson said. "We're looking at our stakeholders and we're saying, 'What can we do to serve them better so they have more confidence in us' so that's reflected in a licence to do things … because I believe what we're trying to do is in the best interests of all Canadians."
In the past three years, his company has brought around 75 groups — made up of politicians, government officials, regulators, investors, First Nations members, media and whoever else will listen — to the forest around Grande Prairie to show them exactly what fracking and drilling look like on the ground.
It's a rare effort, especially for such a young company, but Carlson knows public perception of the oil and gas industry must change for the Montney to reach its potential.
For industry, a best-case scenario would see liquefied natural gas (LNG) terminals go ahead on the West Coast, while a new generation of natural gas-fired power plants comes into service across the country.
The broadest trend in the energy world right now, electrification, suggests these pieces could be falling into place. An expanding global population and electric cars on the horizon, explains Peter Tertzakian, chief energy economist at ARC Financial, will only send the world's power needs higher. As yet to be determined is the role of natural gas, which is more climate-friendly than coal, but less so than nuclear and renewables.
"Years ago, I was giving speeches to oil executives, asking them the question rhetorically, 'What business are you in?'" Tertzakian said. "Inevitably, someone would put up their hand and say, 'I'm in the oil business', and I'd say, 'No you're not, you're in the business of turning wheels, that's your business. You should be concerned about what's happening to the transportation market.'"
With two-thirds of every barrel of oil used to move cars, trucks, planes and boats, a shift towards electric vehicles could cause global gas demand to surge.
That scenario could see the usual boomtown pressures — the social ills, housing shortages and disregard for environmental and safety standards — descend on Grande Prairie, the regional hub for the Montney.
It's a fate the city's mayor, Bill Given, doesn't see as a foregone conclusion.
"The Alberta mythos is that it's the Wild West and you go out and do your thing," he said. "More and more companies are attempting to take a balanced approach and I don't think that's something we would have seen five or 10 years ago."
If a more enlightened approach is, indeed, the new normal, the test will come when gas prices move higher, LNG projects go ahead, and a boom starts in earnest.
Before any of that happens, Canada will need to define natural gas's role in the transition to renewables. While the energy sector is quick to position gas, which has half the carbon emissions of coal, as a bridge fuel to a cleaner future, environmentalists are less enamoured.
Environmental no-man's land
If Canada is to meet its climate change goals, the green lobby doesn't see a big role for gas past 2030. Given how long a power generator would need to run a gas-fired plant to make it profitable, this timeframe leaves gas in an environmental no-man's land.
"This idea of developing and marketing gas as a solution to climate change, I would disagree with," said Matt Horne, a climate change expert with the Pembina Institute, an energy think-tank. "If we have the right policies in place there will be a role for gas. I don't think we create that role by making more and more gas available, that role is created by having strong climate change policy."
- Natural gas industry could dwindle without LNG facilities
- Oilsands growth in doubt and could affect national GDP
Developing the Montney on a grand scale would take a national climate change strategy — as opposed to the current patchwork of provincial regulations — that makes room for natural gas by prioritizing energy efficiency and cutting greenhouse gas emissions elsewhere, like the oilsands.
It's a formidable pan-Canadian goal, but without it, the opposition to pipelines such as Energy East shows what to expect for proposed infrastructure that would carry gas from northeast B.C. to projects like the Pacific NorthWest LNG facility.
The rapid growth of a company like Seven Generations shows how quickly Montney gas can fill up an LNG terminal. Still, building the infrastructure to bring that gas to market can't happen without government policy support and broad social licence from the public.
This, in a nutshell, is the great frustration of the energy industry. The environmental movement, meanwhile, is equally worried about what development without the right climate policies in place will mean for the planet.
This stalemate is, by now, a well-worn part of the national conversation. Given what's coming, the Montney may turn into the defining referendum that determines whether Canada can find any middle ground.