NGI The Weekly Gas Market Report
Canadian business and government energy representatives assureda Washington audience last week that the immense Canadian reservesand strong market ties between the U.S. and Canada spell long-termsupply security for U.S. consumers.
Canadian Energy Minister Ralph E. Goodale put total Canadianrecoverable reserves at between 504 and 617 Tcf, and pointed outthat current annual production is only 5.7 Tcf. That adds up to”enough for both Canada and export demand well into the future,”Goodale said. Exports in 1997 were 2.9 Tcf. And Canada willcontinue to make its reserves available. He said much of hisnation’s economic recovery-the “Maple leaf miracle” – is based onits energy production and promised the marketplace will be allowedto determine supply and demand without undue governmentinvolvement.
Energy is just one portion of the “integrated North Americanmarket…the largest and most lucrative market in the free world,”Goodale said. He spoke to a meeting for producers and governmentofficials hosted by the Natural Gas Supply Association and theCanadian Petroleum Association at the Canadian Embassy inWashington.
“We’re long on pipe, not short on supply,” advised NormanMcIntyre, executive vice president of Petro-Canada, responding todoubts that Canadians will be able to fill all the new exportpipelines being built. He acknowledged the pipes may not be filledimmediately, but pointed out the Western Canada Sedimentary Basin”has doubled its estimated supply of natural gas over the past 20years, in spite of long periods of stagnant demand, low drillinglevels and export prices that declined from $5 to, at one point, 85cents(U.S.).” Canadian production “time and again has exceededexpectations,” he added.
That excess Canadian production may be needed if oil and gasprices continue on their current course and U.S. producers continueto pare their drilling budgets.
Meanwhile U.S. producers don’t want to see any artificial hypingof the market through the imposition of excessive environmentalstandards. While the production is available to meet currentlyforecast markets, it would be impossible to meet the requirementsif the Kyoto environmental protocol is implemented, according toDon Niemiec, Union Pacific Resources vice president.
“According to an analysis performed by EIA, in order to meet thecarbon reduction targets in the Kyoto protocol, coal-fired electricgeneration would have to drop by as much as 75%. And gas-firedgeneration – primarily from increased use of highly efficient newgas combined-cycle plants – would grow 76%.” Niemiec told the groupthe U.S. would need more than 6 Tcf of additional natural gassupplies a year to fuel such increases.
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