A Calgary land broker has paid more than $4.7 million for the rights to drill for gas beneath a South Peace lake.
Scott Land & Lease Ltd. purchased drilling rights on a parcel that includes most of Swan Lake and part of the nearby provincial park in last Wednesday's natural gas and petroleum rights auction — a monthly public tender for oil and gas exploratory and production rights.
The company paid $5,404.97 per hectare — the highest per hectare price for a parcel in the December auction.
The 879 hectare footprint includes both "shallow" and "deep" drilling rights. The shallow rights did not sell in the December auction.
The move to drill for gas beneath the lake, popular with both recreational users and waterfowl, has two conservation groups worried.
The Swan Lake Enhancement Society, a resident's group that also does ecological work, has voiced opposition to the project, saying performing hydraulic fracturing beneath the lake is too risky.
As well, Ducks Unlimited Canada has let the province know its concerns about the impact further drilling beneath the lake could have on its nearby wildlife conservation area.
The timeline on when a well could be brought into production is not clear.
According to the ministry of natural gas development, three wells were drilled beneath the north end of the lake between 2008 and 2010. The ministry did not say whether those wells were brought into production.
The gas reserves included in the parcel lie around 2,600 meters below ground.
South Peace MLA Mike Bernier told Alaska Highway News that any drilling in the area would require significant environmental, resident and First Nations consultations before it went ahead.
According to caveats attached to the parcel, five Aboriginal groups would need to be consulted before any drilling could begin.
The Swan Lake area, on the Alberta border south of Dawson Creek, has seen a major increase in natural gas activity in recent years.
Allen Watson, a Swan Lake resident and president of the enhancement society, said Murphy Oil has been the major player in the area.
Watson said he doesn't buy arguments that horizontal drilling deep below the surface will completely mitigate risk to the lake.
"They say it's going to be three miles beneath the surface, and they ... better not be offering the shallow rights, because that just compounds the risks," he said.
Brad Arner, the manager of Ducks Unlimited Canada's B.C. branch, said that while his organization didn't oppose fracking in the area outright, the group was concerned about the impact it could have on the conservation area they own on the south shores of the lake.
"We're not opposed to the fracking process, but this location, given the conservation values and the recreational values and the provincial park, we said that we felt it was probably not the best place to allow that to happen," he said.
In all, the province leased around $38 million in natural gas rights in December.
