While overall production is flattening out, shale play areas in the Rockies will continue to grow, making the region the main natural gas source for the West in the future, according to Ultra Petroleum Corp. marketing vice president Stuart Nance.

Nance spoke last Tuesday at the opening of the “LDC Forum: Rockies and the West” conference in Los Angeles. Other speakers emphasized that the shift of more Rockies gas to the West is just another ramification of an increasing oversupply in the U.S. gas market.

The importance to California and the rest of the West of traditional southwestern United States and western Canada supply basins will continue to decline, Nance said. He focused on Ultra’s main business area — Wyoming — as the nation’s second largest natural gas producing state, while emphasizing that shale gas has become the new conventional source nationally.

Noting that lower drilling costs tied to faster well completion rates is helping spur the surge, Nance said “this is how we can produce gas at low cost and add reserves and production to the marketplace. We’re now drilling, completing and producing wells all at the same time.”

The challenge for the industry is to develop the demand to match the almost unlimited potential of shale, and in the process not to get production too far out in front of the demand curve, said Nance, citing U.S. shale production as going from 2 Bcf/d in January 2007 to 14 Bcf/d this past summer.

“The Rockies are going to be a much more significant part of the future of gas supplies, not only here in California but throughout the West,” Nance said. “No disrespect to our friends from Canada, but my personal vision is that while the Rockies will play an ever-bigger role, the Canadian supplies will not play as prominent a role as they once did.”

With the advent of El Paso Natural Gas Corp.’s Ruby Pipeline and the Kern River Gas Transmission expansion, Nance said there will be 3 Bcf/d of capacity coming from the Rockies to the West, and increasingly more of that gas will find its way to California. “That’s more than 3 Bcf of high-pressure, very efficient gas transmission capacity from Wyoming to markets in the West,” Nance said. “This is the future of gas supplies for the West.”

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