Cash-heavy energy producers have to begin making some capital investments soon if they expect liquefied natural gas (LNG) and Arctic gas to make up the projected natural gas shortfall in North America, said a senior analyst at BP North America Gas & Power last week.
Speaking at the Canadian Energy Research Institute (CERI) conference, Dawn Constantin said the gas reserves in the Mackenzie Delta and the North Slope are the only two remaining major proven reserves in North America that are unconnected to markets. Prudhoe Bay in Alaska holds an estimated 35 Tcf, while the Mackenzie Delta-Beaufort Sea region holds another 9 Tcf. However, money to access the reserves is not being spent, she said.
North American gas basins now have decline rates of 20% in the United States and 23% in Canada, and are "tired," said Constantin, and will provide mostly flat production going forward. And while pipeline plans to connect both the Mackenzie reserves and North Slope gas are underway, she said they face economic regulatory and environmental risks that companies have not seemed willing to take on.
For pipeline development to proceed, long-term contractual commitments from stakeholders will be needed, while regulators have to offer a long-term stable regulatory climate, she said. If all of the obstacles are overcome, Constantin predicts that 1.2 Bcf/d of gas from the Mackenzie Delta could begin moving south by 2010. Another 4 Bcf/d of gas from Alaska could follow in the next 10 years.
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