CALGARY, A.B. – With the price of natural gas condensates going up like a rocket, producers like Encana are flocking to the Montney Basin in Northeast B.C. and northwestern Alberta.
According to The Financial Post, Encana is now focusing its drilling plans in the region to target the liquid by-product of natural gas production, which is blended with bitumen to make the thick substance flow through pipelines. During an earnings call, Encana CEO Mike McAllister announced that the company had made progress in its condensates switch.
“We have now fully pivoted our Montney assets to be a condensate play,” said McAllister. He added that the switch would add US$200 million to the company’s cashflow since “condensate trades at a premium in Canada.”
Encana’s third-quarter results showed that it averaged 27,900 barrels of condensates per day, an increase of 27 percent. Condensate prices have risen rapidly in Alberta and outpaced U.S. West Texas Intermediate crude oil benchmark in recent weeks.
Analysts from Raymond James noted that the price of condensate hit $78 per barrel this week and prices could continue to rise as demand is forecast to hit 490,000 barrels per day this year, while producers are only supplying 300,000 bpd.
Story courtesy The Financial Post: http://business.financialpost.com/commodities/energy/encana-pivots-to-78-per-barrel-condensates-from-prolific-montney-basin