I don't know if Horn river will be good or bad for the Quebec Gas plays. But the article mentions horn river is economical at $ 5.50 still higher than Quebec and also the tax break by Quebec government should put us on top of B.C. but we will see. Seems like even with the rigs down the price is not going up anytime soon. Hopefully next year is more positive in terms of Nat. gas prices.

By Lauren Krugel – 34 minutes ago

CALGARY — Alberta's "bread and butter" conventional natural gas industry faces a serious threat from a potentially huge resource looming in neighbouring British Columbia, an analyst says.

The Horn River Basin "has the potential to render those plays obsolete," said Michael Mazar with BMO Capital Markets.

"It might be really bad for Alberta."

An executive with Texas-based energy giant ExxonMobil Corp. (NYSE:XOM) told the Wall Street Journal Thursday that early drilling in Northeastern B.C.'s Horn River Basin suggests wells could produce between 16 million and 18 million cubic feet of gas a day.

ExxonMobil and its Canadian subsidiary, Imperial Oil Ltd. (TSX:IMO), were buyers in the June land rights sale, which netted the B.C. government $178 million - triple total sales for the past five months and the ninth-largest monthly tally in history.

Shallow natural gas drilling in Alberta's heartland has break-even economics with gas prices in the $7.50 per 1,000 cubic feet range, Mazar said.

With the price languishing around $4 for the past several months, drilling rigs throughout the province were idle this past winter season, traditionally the busiest time of year. On Friday, the price of natural gas was close to $3.

Horn River gas is economically viable with natural gas in the $5.50 range, Mazar said. Stripped of up-front costs, like infrastructure, that price could be $4.

"You wonder what the future of those (Alberta plays) are if these other (B.C.) plays are that prolific at much lower gas prices," Mazar said.

One area in which Alberta has a leg-up on B.C. is the pipeline infrastructure needed to carry gas to market.

Infrastructure in B.C. is less developed, but natural gas shipper TransCanada Corp. (TSX:TRP) has proposed to build a pipeline from Horn River into its Alberta system, with startup expected some time in 2011.

ExxonMobil and TransCanada are also planning to build a US$26-billion natural gas pipeline in Alaska, which is slated to start up some time after 2017. It will need to traverse northern B.C. in order to hook into TransCanada's Alberta network.

"Certainly it would help. There would be a trunk line that could be tied in from Horn River ultimately to get that gas to market. There is a certain amount of economies of scale by having both those plays," Mazar said.

Horn River has an estimated 250 trillion cubic feet of natural gas in the formation. Experts predict up to a fifth is recoverable.

Natural gas is extracted from the shale rock by either horizontal drilling or fracturing wells.

Shale gas production was long considered too expensive until new technologies were developed in recently years to tap into the hard-to-access resource at lower costs.

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