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Shell puts cork in methane-drilling plans – for now

Globe & Mail (Canada)

Shell puts cork in methane-drilling plans – for now

Company agrees to speak with Tahltan about natives’ concerns about impact of project on northwestern B.C.

September 6, 2008

VANCOUVER — Shell Canada Ltd. has temporarily shelved its plans to drill for coal-bed methane in northwestern British Columbia, delaying work for at least one more season and highlighting concerns over the potential impact of the projects in the remote wilderness area.

“We voluntarily decided to take a pause from our drilling plans this year,” Shell spokesman Larry Lalonde said yesterday, adding that the decision was made in early August at the request of Indian bands in the region.

Both the Tahltan Central Council, which represents the Tahltan and Iskut Indian bands, and the Tahltan Indian Band recently named new leaders who asked Shell to provide more information about the company’s plans, Mr. Lalonde said.

“In order to have that dialogue, it’s easier to do that if we take a pause,” he said.

Shell, the Canadian subsidiary of Dutch energy giant Royal Dutch Shell PLC, secured exploration rights for coal-bed methane – natural gas found in coal seams – in 2004 and drilled three exploratory wells that year. But its B.C. program has run into significant opposition from groups worried about the impact of drilling and production on water, fish and wildlife.

Shell put its drilling plans on hold in 2005, but maintained an office in the region and continued to do environmental studies.

After repairing a road to its exploration area that had been washed out by winter storms last year, Shell had planned to resume drilling this fall.

Shell is hunting for coal-bed methane in the Klappan region, claimed as traditional territory of the Tahltan First Nation and dubbed the Sacred Headwaters because it is the source of the Skeena, Nass and Stikine rivers.

B.C. does not currently have any commercial coal-bed methane production, but the provincial government is keen on exploiting the province’s huge reserves.

Shell’s Klappan project is a bit player in the company’s overall portfolio. Shell last month spent $5.3-billion to acquire Calgary-based Duvernay Oil Corp., which has a big natural gas project in northeastern B.C.

Shell is also pursuing coal-bed methane in B.C. through a $50-million joint venture with Calgary-based Canadian Spirit Resources Inc., which is looking for coal-bed methane in the northeastern part of the province.

“There’s quite a bit of [resource] activity in that area – it’s quite a bit different than the Klappan,” Mr. Lalonde said.

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