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Canadians Target U.S. for Growth

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 Monday.

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 annum.

"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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