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Alliance, M&NP Increase Canadian Export Totals

Alliance, M&NP Increase Canadian Export Totals

While geologists, engineers and regulators continue to study how much more there can be, producers and exporters are showing that western Canadian natural gas supplies are still growing.

The new Alliance Pipeline rapidly turned out to spell increased deliveries to the United States, rather than just a case of a competitive bypass taking traffic away from the Nova-TransCanada system. A count kept by the National Energy Board recorded a sharp increase in Canadian gas exports during the period when the Alliance route to Chicago went through a prolonged commissioning last November, then officially started up in December. The record suggests that at least half the gas carried by Alliance represented additional supplies.

In the two-month period Nov. 1 to Dec. 31, 2000, total Canadian exports jumped 15.2% to 687.2 Bcf from 596.5 Bcf for the same time in 1999. Export deliveries per day increased by about 1.5 Bcf, more than Alliance's rated average daily capacity of 1.3 Bcf, and about as much as the pipe was rated to carry at peak times in order to guarantee firm service.

Export deliveries to Alliance's target region, the Midwest, rose by 17.9% to 258.4 Bcf for Nov. 1 to Dec. 31, 2000, an increase of 39.3 Bcf over the last two months of 1999. Daily average shipments to the region were up by 655 MMcf/d, or an amount equal to half the rated capacity of Alliance.

About half the rest of the overall growth was generated by the year-old Canadian East Coast gas industry's Sable Offshore Energy Project and Maritimes & Northeast Pipeline. Exports to the northeastern U.S. rose 42.7% to 222.3 Bcf during Nov. 1 to Dec. 31, 2000 from 155.8 Bcf a year earlier, an increase in daily average deliveries of about 1.1 Bcf. M&NP commenced deliveries early in 2000, while traffic also increased on routes from western Canada to the Atlantic seaboard. Deliveries slipped by about 200 MMcf/d to California and the U.S. Rocky Mountain region, continuing a long-term trend attributed to shifting Canadian marketer priorities and competitive and pipeline conditions.

Prices shot up in all export destinations. Overall, Canadian exports fetched an average US$5.98 per MMBtu at the international boundary in November and December --- up 136% from $2.53 in the last two months of calendar 1999.

The performance for the first two months of the 2000-01 heating season encouraged optimists who continue to see scope for growth in western Canadian production. They point out that more pessimistic views of reserves and deliverability tend to rest on projections of the industry's conduct during the 1998-99 period of severely depressed oil prices and flat gas markets, when all but shallow drilling for small reserves targets dried up for lack of cash to field rigs.

The NEB acknowledged the pessimistic view in a December 2000 annual report on short-term gas deliverability from western Canada. The board, basing its projections on drilling performance during the spell of hard times, cut its previous forecast of western supply growth in half to 1.1 Bcf/d for 2001-02.

But the NEB also acknowledged there are other, more optimistic views. The board observed that more bullish organizations include a traditionally conservative forecaster that generates frequent outlooks as a guide for member companies' investment and hiring plans, the Petroleum Services Association of Canada. Its forecasts anticipate a more rapid acceleration of drilling and greater switch to deeper, remoter and more prolific targets that spell an increase in western Canadian productive capacity of 2.4 Bcf per year by 2002. Additional studies of the supply outlook are expected soon, led by a new report from the Canadian Gas Potential Committee chaired by former NEB chairman Roland Priddle. Gordon Jaremko, Calgary

©Copyright 2001 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

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