Industry wide over the last few years, Ovintiv has been producing without a doubt the highest natural gas IP rates consistently in the northeast BC Montney. We find ourselves continually highlighting these amazing wells in our Top Well Reports, including this one which appeared to have the highest monthly production rate of any natural gas well in 2023. Month after month, Ovintiv has the majority of the natural gas wells in our Top Well Reports.
And it got us to thinking, on a corporate basis is the company replacing declines and just how fast is the company’s production growing in BC? The simple answer is “yes”, and “it depends”, but there’s more to the story.
For this analysis we will look at all wells licensed to Ovintiv in British Columbia only. While we will look at “gross licensed production”, readers should be aware that Ovintiv has a joint venture in its Montney play with Mitsubishi (Ovintiv 60%/Mitsubishi 40%), so the actual net volumes to Ovintiv would need to account for the company’s working interest that it shares with Mitsubishi.
Let’s start at the beginning. The company’s BC development seemed to really get going back in 2004, back when the company was still Encana. Interestingly at the time it was mostly the Cadomin formation that was being drilled, and not the Montney, although that soon changed over the next few years to become almost exclusively Montney. From that period when BC volumes were minimal, the company has been able to grow gross licensed production to over 1.6 BCF/d of natural gas, in addition to over 41,000 bbl/d of liquids production (Figure 1). A truly amazing accomplishment.
Figure 1 – Ovintiv gross licensed production – British Columbia only (hover over chart to see details)
But it hasn’t all been easy or in a straight line. Looking at the last 10 years (Figure 2) shows a bit of a divergence in production by commodity type. While natural gas production (red line) continues to grow at a steady pace, and recently hit all time highs on an aggregate basis, liquids production hit its high in 2018 and has not been able to recover to those levels since. Late in 2018, Ovintiv had gross licensed production in BC of over 70,000 bbl/d of liquids, compared to current levels of over 41,000 bbl/d. There could be many explanations for this; perhaps the company consciously selects drier gas locations as it prepares for Canada’s first LNG project to come onstream in the middle of this decade; perhaps the wells get slightly gassier over time; perhaps the best liquids locations have already been drilled, or maybe it’s simply that Ovintiv does not spud as many wells in BC as it used to.
Figure 2 – Ovintiv gross licensed production – last 10 years – BC only (hover over chart to see details)
So as far as figuring out a growth rate for the northeast BC assets, I suppose it depends on the timeframe you use. Over the last 20 years, the company has grown its natural gas production by thousands of percent. Over the last 10 years, production has grown 82%. Over the last 5 years, production is roughly flat. Over the last 3 years, up 19%. Ultimately it appears to be a capital spending decision. The public data suggests that the Montney resource is as good if not better than any areas nearby, and the amount of wells drilled will likely dictate the growth rate. Looking back at Ovintiv’s spud activity over the last decade shows this well (Figure 3). The largest increase to production (both liquids and natural gas) over the last decade came during the 2017-2018 period, which (no surprise), saw the heaviest drilling activity by Ovintiv.
Figure 3 – Ovintiv spuds by year – British Columbia
| Year | Spuds |
| 2014 | 51 |
| 2015 | 25 |
| 2016 | 28 |
| 2017 | 177 |
| 2018 | 152 |
| 2019 | 72 |
| 2020 | 56 |
| 2021 | 56 |
| 2022 | 42 |
| 2023 | 82 |
One thing is clear, Ovintiv (and its JV partner Mitsubishi) will continue to play an important role in Canadian natural gas markets, and will likely continue to show some of the highest initial production rates in BC for some time (unless the Horn River / Liard Basin make a comeback). With LNG Canada poised to begin shipping gas in the not too distant future, BC natural gas producers will continue to be in focus. At the BOE Report, and through public data tools Petro Ninja and BOE Intel, we will aim to keep readers informed of interesting trends and activity.