Western Canadian gas is poised to play a larger role in the U.S.supply picture at a time when gas-directed drilling activity hasfar surpassed oil activity in the region, according to the CanadianEnergy Research Institute (CERI).

The top-10 western Canadian drillers recorded 760 gas wellcompletions in the first quarter compared to only 39 oilcompletions. “To my knowledge, that’s unprecedented in westernCanada. And given the recent resurgence in crude oil prices, thisis another trend to keep an eye on for the balance of the year withregard to where we will end up on gas supply heading into nextwinter,” Leonard Coad, CERI vice president for North American gasand electricity, told attendees at GasMart/Power ’99 in DallasMonday.

Coad spoke with two other Canadian industry experts on a paneladdressing the Canadian supply and deliverability picture. JackCrawford, vice president of regulatory affairs for AlliancePipeline and Ron Turner, president of energy transmission forTransCanada PipeLines, also made their respective cases for anincreased role for Canadian gas in U.S. markets.

Turner said about 60% of TransCanada’s volumes now flow into theUnited States. “This represents about 12% of the Lower 48 demand.”Turner expects Canada’s U.S. market share to grow as U.S. supplygrowth continues to lag demand growth. “Over the next 10 years, theGulf is still the big play. The western Canadian sedimentary basinis a pretty clear No. 2. These will be the primary growth basinsserving the continental market. In western Canada, we’ve seencontinuous production increases averaging 10% per year.. We expectto continue increasing production annually by 0.5 Bcf a day perannum.

“Canadian exports, including the East Coast, will grow fromabout 3.1 Tcf this year to about 4.7 by 2010. That’s a 50% increaseover a 10-year period.”

And the gas is up there in western Canada. “About 60% of the gasbelieved to be in a mature place has been discovered to date. Withabout 50 Tcf of proved reserves and 150 Tcf of undiscovered gas inconventional plays, western Canada has lots of gas,” Coad said.

“The message is simply that there is significant remaining gasin western Canada. The real question is one of timing.”

Speaking of timing, Alliance is indeed coming, Crawford willhave you know, coming in October 2000 and bringing 1.3 Bcf/d ofadditional western Canadian gas to the U.S. Midwest. (Allianceconstruction is to begin May 17.) According to Crawford, thecurrent U.S. supply picture has about 2.5 Bcf/d moving to theMidwest from Canada, about 5.5 Bcf/d moving eastward from theRockies 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 Alliancecomes on line, Gulf Coast lines will become a source of swingsupply, Crawford said. However, he downplayed the effect Alliancewill have on the market, noting the new pipe will only be addingsupply equal to about one year of overall market growth.

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