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Search for Gas on Northeastern Frontier Picks Up Speed

Search for Gas on Northeastern Frontier Picks Up Speed

The northern frontier on the eastern side of the continent is stepping up work on adding new supplies to the North American natural-gas market, along with promoters of a development and pipeline revival in Alaska and the Northwest Territories.

Canadian industry and government sponsors expect results soon from an array of studies under way on tapping discoveries offshore of Newfoundland and Labrador. The province's Minister of Energy, Paul Dicks, urged on the collaborative work by a consortium organized as the Natural Gas Stakeholder Committee, saying "this cooperative approach will help facilitate timely and responsible natural gas development." Committee chairman Rex Gibbons, a former Newfoundland energy minister, predicted results of the four-part canvass of northeastern gas opportunities would start arriving within four months. The research, being done by government and industry agencies, includes a market analysis, a review of pipeline possibilities, an examination of non-pipeline options and an economic impact assessment.

Backers of the work include the Newfoundland Ocean Industries Association, the Atlantic Canada Opportunities Agency, the Newfoundland energy department, the Canada-Newfoundland Offshore Petroleum Board, Natural Resources Canada, Industry Canada, the Canadian Association of Petroleum Producers, Newfoundland and Labrador Hydro and Newfoundland Power.

The federal cabinet minister responsible for the opportunity agency, described the effort as building "a base of information regarding possible development options, founded on objective professional analysis of the realities of resources, technologies, markets and economics." Newfoundland Industry Minister Sandra Kelly added "we are not looking for one specific solution or recommendation. Rather, we are assessing a range of possible options, as well as local and export market potential. My department is very interested in that capability, and committed to exploring ways it could be put to use."

The Newfoundland effort has the same starting point as the work in the northwest on reviving the Alaska Natural Gas Transportation System or a Mackenzie Delta pipeline. The East Coast stakeholders also start with consensus forecasts that demand will continue to rise around the world and in Canada, at least, gas is likely to repeat its 1999 performance of generating more cash flow for the petroleum industry than oil. Earlier stages of the work documented the extent of gas resources offshore of Newfoundland and Labrador. The offshore petroleum board, a collaborative federal-provincial agency, has since raised expectations of the resource endowment.

The latest estimates raised the count of known Newfoundland gas reserves by 12% to 9.3 Tcf. The deposits encircle the island of Newfoundland and stretch to the northern tip of Labrador in a band up to 218 miles wide.

Reserves credited to the Hibernia oilfield 180 miles out to sea on the Grand Banks, where production has been under way since late 1997 with gas being re-injected, have gone up 40% to 1.4 Tcf. For the nearby White Rose oilfield, in line to become the third Grand Banks production platform reasonably soon after Terra Nova starts up in first-quarter 2001, the board has also raised gas-reserves estimates by 40% to 2.1 Tcf. Development proposals range from the Texas-based Tatham organization's blueprint for a subsea pipeline grid spanning the East Coast from Newfoundland to New England to fleets of shuttle tankers using new technology for compressing gas or converting it to liquids. While concentrating on exports to achieve volume, all projects include supplying Newfoundland with gas - a political must in an area paying fearsome prices to rely on oil and hungry for associated development such as petrochemicals to counter double-digit unemployment rates.

Gordon Jaremko, Calgary

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