OIL and GAS Production and Activity

in British ColumbiaStatistics and Resource Potential

1996­–2006­

www.gov.bc.ca/empr

The Resource RegionsThe northeast is currently the only area of B.C. producing commercial quantities of oil and gas. Other parts of the province contain significant quantities of sedimentary rock that may be productive in the future, for example the interior basins. In addition, coalbed gas exploration activity is currently underway in several coalfields.

The Northeast Petroleum exploration and development have been underway since 1952 in the northeastern region of the province, a 194,000 square-kilometre area spanning the northern foothills of the Rocky Mountains and the northwest part of the Western Canada Sedimentary Basin. Almost 19,500 wells have been drilled to date. Estimates of marketable conventional natural gas resources that remain to be discovered vary from 26 to 44 trillion cubic feet (Tcf).

The potential for significant additional natural gas reserves exists in the B.C. Foothills, shallow Cretaceous, Deep Basin tight gas and deeper plays.

The total coalbed gas resource in the northeast region is estimated to be 60 Tcf. This resource is being evaluated by several companies. It is estimated that up to 145 million barrels of recoverable oil remain undiscovered.

With the commercial success of several shale gas plays in the United States, British Columbia’s shales are recognized as potential reservoirs which may have the capacity to hold 250 to 1,000 Tcf gas-in-place. Though recoverable volumes will be considerably less, shale gas remains a significant untapped resource. In 2005, a Ministry study of the shale gas potential within the Devonian strata of northeast B.C. focused on the Exshaw, Besa River, Fort Simpson and Muskwa formations. Areas of interest included parts of the Liard Plateau and Basin, and Prophet Trough in northeast B.C., and western extensions of the Peace River Arch/embayment. A more recent study evaluates the regional shale gas potential of the Triassic Doig and Montney Formations of northeast B.C. by quantifying the potential gas-in-place using spatial analysis.

Tight gas is likely to hold the highest potential for remaining technically recoverable natural gas resources in the northeast. Tight gas is now being specifically targeted in basin-centered resource play developments, like those focused on the Devonian Jean Marie at Greater Sierra and the Cretaceous Cadomin at Cutbank Ridge. In 2003, the Ministry of Energy, Mines and Petroleum Resources released an Exploration Assessment of Tight Gas Plays for northeast B.C. and determined that the in-place, tight gas resource base could range from 250 to over 500 Tcf. The ultra-marginal royalty applicable to tight gas was introduced in 2005.

The Southeast Exploration in the southeast corner of B.C. has focused onconventional oil and gas and coalbed gas. To date, over 60 wells have been drilled. Many have encountered hydrocarbon shows including the discovery of an estimated 600 billion cubic feet (Bcf) of carbon dioxide-rich natural gas.

The Ministry of Energy, Mines and Petroleum Resources has completed two geological studies in the southeast area. These studies identified major play trends and the petroleum resource potential of the area. Currently, coalbed gas continues to be the major focus of exploration activity. An evaluation pilot project is ongoing and interest in the Crowsnest coalfield remains high.

The Central Interior and NorthwestThe Bowser, Whitehorse and Nechako basins – interior sedimentary basins in the central and northwest parts of the province – have

1.1TcfCBG

1.1TcfCBG

400MMcf/d

200MMcf/d

150MMcf/d

Alaska

4

65

311

2

17

810 9

Pipelines, Facilities and Sedimentary Basinsin British Columbia

* Resource estimates for oil and marketable natural gas in the Western Canada Sedimentary Basin (northeast B.C. portion) represent ultimate potential volumes, which include discovered resources plus undiscovered resources. Discovered resources consist of volumes already produced (cumulative production) and known reserves that have yet to be produced. Resource estimates for all other basins represent undiscovered potential volumes.

* The majority of the petroleum and natural gas rights in B.C. are owned by the Province. Rights to explore for and develop provincial petroleum and natural gas are conveyed by various forms of tenure that are made available for public tender.

YukonN.W.T.

U.S. A.

Alberta QueenCharlotteIslands

PrinceRupert

Kitimat

NechakoBasin

9.8 Bbbls25.9 Tcf Gas

QueenCharlotteBasin

5.1 Bbbls9.5 Tcf Gas

WinonaBasin

9.4 TcF Gas

VancouverIsland

Vancouver

Victoria TofinoBasin

GeorgiaBasin

1.8 Bcf/d

6.5 Tcf Gas

2.7 Bcf/dRockyMountainTrench

SE B.C.

88.0 MMbbls0.4 Tcf Gas13.7 Tcf CBG

Kamloops

South Central B.C.0.58 Tcf CBG

PrinceGeorge

QuesnelTrough

Bowser/SustutBasins

2.5 Bbbls6.5 Tcf Gas

8 Tcf CBG

Ala

ska

WhitehorseTrough1.8 Tcf Gas

0.066Tcf CBG

0.13Tcf CBG

300MMcf/d100

MMcf/d

84MMcf/d

944 Mmbbls52 Tcf Gas60 Tcf CBG

Fort Nelson

WesternCanadaSedimentaryBasin

Hudson’sHope

ChetwyndDawsonCreek

FortSt. John

TumblerRidge

Natural Gas Pipeline

Major Natural Gas Plants

Oil Pipeline

Oil Refineries

Alliance Pipeline

Sedimentary Basins

Coalfields

Resource estimate*

Billion barrels oil in place

Million barrels oil in place

Coalbed gas in place

Trillion cubic feet gas in place

Natural Gas pipeline capacity

Million cubic feet per day

Billion cubic feet per day

Bbbls

MMbbls

CBG

Tcf

MMcf/d

Bcf/d

Natural Gas Plants1Fort Nelson2McMahon3Pine River4Noel5Midwinter6Wildboy7Ekwan8Ladyfern9Sikanni10Aitken Creek11Kwoen

Bowser and Nechako Basins

Areas of high Oil & Gas prospectivity

Basin Outlines - modified fromMossop, G.D., Wallace-Duddley, K. E., Smith, C.G., Harrison, J.C.’ (Comp.) 2004:Sedimentary Basins in Canada, GSC Open File 4673; Wheeler, J.O. & McFeely, P 1987:Tectonic Assemblage Map of the Canadian Cordillera, GSC Map 1712A.

1.1 Tcf CBG

significant petroleum resource potential. The Geological Survey of Canada has estimated a combined 17.8 Tcf of natural gas and 7.6 billion barrels of oil in place for these three basins using conceptual play models. Historical exploration in the basins has been limited with two wells drilled in the Bowser Basin and 11 wells drilled in the Nechako Basin.

Current exploration activity is focused on coalbed gas resources in the Bowser Basin and on conventional oil and gas targets in the southern Nechako Basin. Tenure has been let in the Klappan coalfield and an exploration program has been initiated. A pre-tenure referral and community engagement program has been completed in the Telkwa coalfield. Proposals recently submitted to conduct oil and gas exploration work in the southern Nechako Basin could lead to exploration work. The potential oil and gas development and resulting economic diversification in the Nechako Basin is welcomed in the wake of the mountain pine beetle infestation and its effect on forestry-dependent communities.

The Province initiated a geophysical exploration program in the Nechako Basin in 2003 to assess critical factors for the presence of oil and gas. Geologists working for the Province conducted fieldwork in the Nechako Basin in 2005 and 2006 and are planning a third season in the summer of 2007. The Ministry of Energy, Mines and Petroleum Resources is also working with other research agencies (such as the Geological Survey of Canada and universities) to obtain modern geophysical data to better understand the configuration of the basin and assist with any exploration efforts.

The Georgia Basin Limited drilling for conventional natural gas has been conducted within the onshore regions of the Georgia Basin, both on eastern Vancouver Island and in the Fraser Valley.

The 57 wells drilled since 1900 have been without commercial success. However, because only 16 have reached depths greater than 914 metres, most of the basin’s potential remains unevaluated. The most recent assessment by the Geological Survey of Canada estimated that as much as 6.5 Tcf of in-place natural gas exists in three conceptual play types within the confines of the Georgia Basin.

Onshore portions of Vancouver Island contain an estimated 1.1 Tcf of coalbed gas and exploration opportunities continue to garner interest. Discussions are ongoing with proponents regarding potential coalbed gas exploration programs.

The Queen Charlotte and the Tofino-Winona BasinsIn the late 1960s, 14 offshore wells were drilled without commercial success. Onshore exploration on Graham Island, where 10 wells were drilled between 1913 and 1984, was also without commercial success. Resource assessment by the Geological Survey of Canada estimated in-place oil and gas resources at 9.8 billion barrels and 25.9 Tcf for the Queen Charlotte Basin. The Tofino assessment region combines both the Tofino and Winona Basins. Potential for both basins is estimated at 9.4 Tcf of gas-in-place.

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For more information, contact: (250) 952-0133

Oil and Gas in British ColumbiaBritish Columbia is committed to promoting environmentally and socially responsible exploration and development of oil and natural gas resources throughout the province. The petroleum industry is vital to the provincial economy, employing thousands of British Columbians and generating funding for social and educational programs.

In 2006, 1,416 wells were drilled in British Columbia. Total Crown revenue collected from oil and gas royalties, sales of gas rights, fees and rentals was $2.14 billion. Production of natural gas was 1.16 Tcf – the same high level as 2005. The sales value of oil and gas production was $7 billion. Industry investment was an estimated $4.7 billion(Canadian Association of Petroleum Producers).

Investing in British ColumbiaOn February 27, 2007, the Province released the BC Energy Plan: A Vision for Clean Energy Leadership.The BC Energy Plan puts British Columbia at the forefront of environmental and economic leadership in energy policies by adopting a triple bottom line approach to:uMaintain B.C.’s advantage as one of the most

competitive jurisdictions in North America. uLead in environmentally and socially

responsible oil and gas development.uCreate opportunities for communities and

First Nations.

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QP #4500163961

Oil and Gas Highlights of theBC Energy PlanThe BC Energy Plan contains commitments to encourage the development of unconventional natural gas such as tight gas, shale gas, and coal-bed gas. Through ongoing geoscience studies and resource assessments, the Ministry of Energy, Mines and Petroleum Resources will make valuableresource information publicly available.

Among the measures aimed at conservation, energy efficiency and clean energy, the BC Energy Plan will promote the exploration of new technologies for safe underground disposal or sequestration of carbon dioxide from oil and gas facilities.

InfrastructureThe Province is promoting the development of British Columbia’s onshore oil and gas resources through: uRoyalty credits that support new multi-season

roads and pipelines.uDirect spending in upgrading public roads

heavily used by oil and gas industry.uPublic private partnerships such as the Sierra

Yoyo Desan Road.

The Province will implement an infrastructure royalty credits program for roads and pipelines worth $65 million and, for the fourth year in a row, partner with the Ministry of Transportation which will invest $42 million in public road upgrades in northeast British Columbia.

Service Sector StrategyThe Province is working with the service sector, producers and educational institutions to support business growth and skills development and ensure that British Columbia’s service sector continues to thrive.

RoyaltiesThe Province’s targeted royalty programs focus on drilling deep, marginal, ultra-marginal, coalbed gas and summer wells.

A net profit royalty program focusing on large unconventional resources and new basins wasintroduced on July 31, 2007.

RegulationsThe Ministry will consolidate, integrate and harmonize regulations across a broad range of ministries and agencies to create a streamlined regulatory environment for oil and gas development in B.C.

Communities and Stakeholders Relations The Ministry has implemented a community and stakeholder engagement program for information sharing, engagement and resolution of potential resource development issues.

The BC Energy Plan calls for elimination of all routine flaring at oil and gas producing wells and production facilities by 2016, with an interim goal to reduce flaring by 50 per cent by 2011.

Pipelines and FacilitiesApproximately 32,400 km of gas-gathering and transmission lines are provincially regulated, including the Vancouver Island pipeline which began delivering natural gas to customers in the fall of 1991.

Gas is processed at 47 plants and central dehydrators in northeast B.C., many of which recover sulphur and liquid by-products. New gas processing facilities in the Steeprock, Sheklie, Fourth Creek and Brassey areas came on stream in 2006.

Major gas plants are located at Taylor, Fort Nelson and Pine River. Three main gathering systems deliver crude oil and natural gas liquids to facilities at Taylor. Four other lines deliver oil and liquids to the provincial and Alberta systems from fields in Brassey, Ring/Border, Kahntah and Desan.

Although some of the province’s oil is processed at a refinery in Prince George, most is transported by pipeline to Kamloops, then to the Vancouver and Washington area refineries by the Trans Mountain Pipeline and Puget Sound Pipeline. There are approximately 2,765 km of provincially-regulated oil and natural gas liquid pipelines in the province.

Petroleum and Natural Gas Title Holdings and Revenue 1996 – 2006 (calendar years)

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Permits

Active at December 31 33 28 29 25 19 13 22 22 27 26 25

Hectares (millions) 0.3 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.2 0.2 0.2

Leases

Active at December 31 8129 8662 8803 8815 9164 9543 9726 10056 10595 11456 12204

Hectares (millions) 3.3 3.4 3.5 3.5 3.9 4.2 4.4 4.7 4.9 5.4 5.8

Drilling Licences

Active at December 31 1126 1347 1449 1606 1691 1807 2039 2154 2202 2190 2094

Hectares (millions) 1.9 2.3 2.5 2.8 2.9 3.0 3.3 3.5 3.4 3.2 3.1

Crown Reserves - Disposition Bonuses ($millions)

Petroleum and natural gas permits $3.2 $0.6 $0.3 $0.6 $0.8 $4.6 $4.2 $2.1 $5.8 $0.0 $3.3

Drilling Licences $68.4 $152.4 $67.3 $155.8 $211.9 $375.4 $238.7 $601.0 $169.6 $403.6 $490.0

Petroleum and Natural Gas leases* $56.4 $63.8 $28.7 $19.8 $35.6 $59.4 $45.5 $43.6 $57.3 $132.4 $137.7

Totals $128.0 $216.8 $96.3 $176.2 $248.2 $439.5 $288.5 $646.7 $232.8 $536.0 $631.0

Fees, Rentals, etc. ($millions)

Petroleum and natural gas permits $0.3 $0.2 $0.2 $0.3 $0.3 $0.1 $0.1 $0.1 $0.2 $0.2 $0.2

Drilling Licences $7.3 $8.9 $10.4 $11.5 $12.3 $12.5 $12.5 $14.2 $13.6 $13.3 $12.7

Leases $26.7 $29.6 $29.1 $29.3 $32.3 $36.3 $37.4 $42.4 $43.4 $49.8 $55.7

Miscellaneous fees $0.5 $0.6 $0.8 $0.2 $0.2 $0.2 $0.2 $0.1 $0.1 $0.1 $0.4

Totals $34.9 $39.3 $40.5 $41.3 $45.0 $49.1 $50.1 $56.8 $57.2 $63.3 $69.0

Crown Royalties ($millions)

Gas and processed products $131.7 $174.8 $180.1 $293.7 $876.6 $1,131.8 $795.2 $1,311.5 $1,395.1 $1,844.7 $1,331.6

Oil $72.9 $79.6 $62.7 $76.1 $136.4 $110.7 $107.9 $99.0 $109.3 $116.6 $107.8

Totals $204.6 $245.4 $242.8 $369.8 $1,013.0 $1,242.5 $903.1 $1,410.9 $1,504.4 $1,961.3 $1,439.4

Revenue Totals ($millions) $367.5 $510.5 $379.6 $587.3 $1,306.2 $1,731.1 $1,241.7 $2,114.4 $1,794.5 $2,560.5 $2,139.3

Note: due to rounding, totals cannot always be reconciled with subtotals.*Value for 2006 includes a special petroleum and natural gas lease issued by Order-in-Council.

(This information is provided for the convenience of the public. The British Columbia government does not assume liability for any errors or omissions.)

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Wells Drilled

Oil 71 109 93 38 58 75 40 69 54 41 54

Gas 221 213 380 405 494 594 427 770 986 1235 1122

Abandoned 118 83 113 121 137 95 66 76 58 50 50

Cased/Service 51 178 66 56 81 111 110 126 172 100 190

Totals 461 583 652 620 770 875 643 1041 1270 1426 1416

Depth Drilled (thousands of metres)

Development 377 505 578 539 706 823 702 1162 1396 1747 1670

Exploratory Outpost 219 295 300 311 402 571 399 686 799 706 725

Exploratory Wildcat 129 128 95 74 92 110 130 158 122 165 170

Experimental 3 0 0 0 4 15 5 16 2 6 22

Totals 728 928 973 924 1204 1519 1235 2022 2318 2625 2586

Geophysical Crew-Weeks Worked 160 190 112 105 140 167 160 164 194 430 334

Industry Capital Investmenta

($billions) 1.1 1.6 1.3 1.1 1.8 3.1 2.4 3.8 3.9 4.9 4.7

Producing Oil Wells, December 31 820 922 943 925 1008 1027 1045 1080 1107 1089 1092

Producing Gas Wells, December 31 1215 1425 1630 1922 2302 2697 3011 3569 4385 5217 6608

Remaining Reserves Estimate

Oil (106m3) 21 23 25 26 27 25 22 22 22 21 N/A

Marketable Gas (109m3) 244 229 226 237 240 252 255 260 317 363 N/A

Crude Oil and Equivalent Production (103m3)b 2645 3066 3317 2910 3217 3188 3336 2840 2709 2461 2358

Distribution of B.C. Crude Oil and Equivalent

Deliveries to B.C. Refineries (103m3) 1216 1149 1016 1512 1036 802 1093 1341 1284 1051 1020

Exports to Alberta and US (103m3) 1500 1937 2248 1452 2096 2334 1869 1469 1302 1303 1165

Natural Gas Supply (109m3)

Total B.C. gas productionc 23.5 24.7 25.3 25.9 26.6 29.9 32.4 30.8 32.0 32.8 32.8

Imports from Alberta, Northwest Territories, Yukon 2.1 1.8 1.9 1.6 2.4 3.4 2.6 2.0 1.9 1.7 1.0

Total Supply 25.6 26.5 27.2 27.5 29.0 33.3 35.0 32.8 33.9 35.4 34.6

Natural Gas Distribution (109m3)

Gas Deliveries in B.C. (marketable gas) 8.7 8.3 8.0 7.8 8.7 8.7 8.2 7.7 7.6 7.6 6.1

Gas Exported (marketable and raw) 11.4 12.5 13.4 13.8 14.7 18.4 20.8 19.5 20.6 21.4 22.0

Gas injected to storage & recovery schemes 1.6 1.6 1.3 1.5 1.4 1.5 1.2 1.0 1.3 0.8 1.2

Flared, fuel, processing, shrinkage & plant wasted 4.0 4.1 4.4 4.6 4.5 4.8 4.7 5.0 4.4 5.6 5.3

Total Distribution 25.7 26.5 27.1 27.7 29.3 33.4 35.0 33.2 33.9 35.4 34.6

Propane Production (103m3) 458 472 512 252 528 538 446 362 366 344 370

Butane Production (103m3) 233 251 309 197 325 322 292 295 295 318 336

Sulphur Production (103 tonnes) 917 912 941 925 899 904 865 770 791 743 847

B.C. Petroleum Product Consumption (106m3) 10.2 10.6 10.7 11.0 11.1 10.9 11.1 11.3 12.1 11.7 11.4

B.C. Natural Gas Consumption (109m3) 6.9 6.9 6.8 6.8 7.1 6.5 5.7 5.8 6.0 6.3 6.2

a CAPP (Canadian Association of Petroleum Producers) estimate does not include operating costs and royalties paid.b Includes condensate and pentanes plus production. Volumes in 103 m3 at 15 degrees Celsius.c Volumes in 109 m3 at 101.325 kPa and 15 degrees Celsius, not including gas from storage wells which totaled 0.8097 m3 in 2006 (14.65 psia and 60 degrees Fahrenheit.)d Includes field losses (i.e., flaring, fuel & meter differences) and loss during distribution and export.

Conversion Factors103m3 gas x 35.494 = mcf gasm3 oil x 6.29 = barrels oil

Drilling, Production and Distribution Statistics 1996 – 2006 (calendar years)

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