Canadians Target U.S. for Growth
Western Canadian gas is poised to play a larger role in the U.S.
supply picture at a time when gas-directed drilling activity has
far surpassed oil activity in the region, according to the Canadian
Energy Research Institute (CERI).
The top-10 western Canadian drillers recorded 760 gas well
completions in the first quarter compared to only 39 oil
completions. "To my knowledge, that's unprecedented in western
Canada. And given the recent resurgence in crude oil prices, this
is another trend to keep an eye on for the balance of the year with
regard to where we will end up on gas supply heading into next
winter," Leonard Coad, CERI vice president for North American gas
and electricity, told attendees at GasMart/Power '99 in Dallas
Coad spoke with two other Canadian industry experts on a panel
addressing the Canadian supply and deliverability picture. Jack
Crawford, vice president of regulatory affairs for Alliance
Pipeline and Ron Turner, president of energy transmission for
TransCanada PipeLines, also made their respective cases for an
increased role for Canadian gas in U.S. markets.
Turner said about 60% of TransCanada's volumes now flow into the
United States. "This represents about 12% of the Lower 48 demand."
Turner expects Canada's U.S. market share to grow as U.S. supply
growth continues to lag demand growth. "Over the next 10 years, the
Gulf is still the big play. The western Canadian sedimentary basin
is a pretty clear No. 2. These will be the primary growth basins
serving the continental market. In western Canada, we've seen
continuous production increases averaging 10% per year.. We expect
to continue increasing production annually by 0.5 Bcf a day per
"Canadian exports, including the East Coast, will grow from
about 3.1 Tcf this year to about 4.7 by 2010. That's a 50% increase
over a 10-year period."
And the gas is up there in western Canada. "About 60% of the gas
believed to be in a mature place has been discovered to date. With
about 50 Tcf of proved reserves and 150 Tcf of undiscovered gas in
conventional plays, western Canada has lots of gas," Coad said.
"The message is simply that there is significant remaining gas
in western Canada. The real question is one of timing."
Speaking of timing, Alliance is indeed coming, Crawford will
have you know, coming in October 2000 and bringing 1.3 Bcf/d of
additional western Canadian gas to the U.S. Midwest. (Alliance
construction is to begin May 17.) According to Crawford, the
current U.S. supply picture has about 2.5 Bcf/d moving to the
Midwest from Canada, about 5.5 Bcf/d moving eastward from the
Rockies to the Midwest, another 8.5 Bcf/d coming up from the Gulf,
and 6 Bcf/d coming out of the Midwest going eastward. When Alliance
comes on line, Gulf Coast lines will become a source of swing
supply, Crawford said. However, he downplayed the effect Alliance
will have on the market, noting the new pipe will only be adding
supply equal to about one year of overall market growth.
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