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Montney Supply Study Supports Investment Decision

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Canada / 2017 / Strategic Advisory

250 MMcf per day in expected yield

Evaluation of a $500MM investment

Extending infrastructure in a world-class gas play

Applying strategy to E&P investment decisions

Challenge

  • Faced with a very short timeline for a decision, the major midstream company needed to value an infrastructure investment opportunity in the Montney play
  • The company had to balance the gas supply with the competing plants already in the area to assess market share risk and the volume of material being handled. This would impact the scale and cost of the project and the expected life of the investment based on future production in the area

Solution

  • Sproule technical experts reviewed the production history, completion history, and geologic interpretation of the play, including thermal maturity windows, to create a set of type curves for each maturity window
  • The team then created a development inventory for the operator’s lands which included some remaining peripheral offsetting lands
  • Using the planned plant capacity of solution gas and condensate, Sproule experts then determined how long the plant would stay at capacity given three development scenarios
  • In addition, Sproule provided a profitability comparison of this play versus other plays in the operator’s portfolio to assess the likelihood of the project moving forward from the operator’s perspective

Value

  • The midstream company could reduce the risk of the investment opportunity by addressing critical future development and supply questions