Devon Canada announced last Tuesday, April 3rd that the company had made the decision to permanently close its Coleman natural gas plant.
According to Devon Canada Government and Public Affairs spokesperson Nadine Barber, the company made the difficult decision based on two major factors: the sustained low price of natural gas and the age of the Coleman facility.
“It is important that people understand this wasn’t an easy decision, but the right business decision was to permanently close the plant,” said Barber.
“We’ve taken a lot of time to evaluate all of our options and make sure we had exhausted all of our avenues.”
“Those two factors make it the right time to wind down the plant.”
Natural gas prices have reached a 14-year low in Canada in recent months, falling below $2 U.S. per British Thermal Unit (BTU) - approximately 1,055 joules - and the future price deck is forecast to remain around $2.53 for the remainder of 2012.
Experts say this drop-off in price is due mainly to warmer than normal winter weather diminishing demand and new natural gas discoveries creating record high inventories across the country (high supply, low demand).
In addition, Barber said the 51-year-old Coleman facility - which was purchased by Devon Canada from Morrison Petroleum in 1998 after having been purchased from Northstar Energy Services the year before - has long surpassed its lifespan.
She said the nearest facilities which are comparable in size and age are Shell Canada’s Waterton sour gas complex and the Nexen gas plant in Balzac, which was closed last April and is scheduled for demolition, adding that the nearest comparable Devon facility is in Red Deer.
“The Coleman plant is such a unique facility in the province that it’s hard to compare,” said Barber.
“Rarely do you see that size and scope of facility built any longer.”