Ft. Liard Production Improves Canadian Outlook
By the end of the month, Chevron Canada Resources Ltd. expects
only two wells drilled in the Northwest Territories to be producing
about 120 MMcf/d of gas. That is welcome news to a market in
desperate need of new supply sources, particularly in western
First production and sales started flowing recently from the
Fort Liard M-25 well at 35 MMcf/d, and Chevron expects to ramp up
production this week to 50 MMcf/d. The facility and well completion
design have the capacity to handle rates of up to 75 MMcf/d, and
Chevron will make a decision on whether to expand production in
about a month. The M-25 production is transported to processing
facilities at Westcoast Energy's gas plant in Fort Nelson, BC.
Meanwhile, Chevron's K-29 well has been producing since April with
a total to date of more than 10.5 Bcf. It currently is producing
about 70 MMcf/d.
The news could not come at a more opportune time, after Canada's
National Energy Board released a market report last week indicating
that for the next several years, demand for natural gas will grow
"considerably in the Pacific Northwest and British Columbia," and
that Canadians should expect record prices for natural gas this
winter. The Energy Market Assessment also indicated that
"additional capacity will likely be required in BC to meet
incremental gas demand."
Like the rest of North America, NEB said that Canada's demand
growth has outpaced supply growth for natural gas, but gas
producers were "responding to the current high price environment
with aggressive drilling programs." NEB predicted that recent
developments would relax the supply crunch, with more than 400
MMcf/d from Sable Island production and 250 MMcf/d from the Fort
Liard area, where Chevron's wells are producing.
Jim Simpson, president of Chevron Canada Resources, said the
company was "pleased" to be delivering gas to the "very strong
markets" a month ahead of schedule. "Production from these prolific
wells meets several major goals for Chevron. It strongly positions
our company in an exciting new region and provides an excellent
balance to our existing producing assets in Western Canada and
offshore East Coast."
The company's success in the Fort Liard area will help
Westcoast's facilities, too. According to the NEB report, Westcoast
is now facing about 200 MMcf/d of decontracting, which could
increase in the short term, depending on the Fort Liard volumes -
from all producers in the region - and from volumes moving on
Alliance and Southern Crossing pipelines. Increased drilling and
production from the region should improve the present capacity
problems, NEB said.
Partners in the M-25 and K-29 wells include operator Chevron,
which holds a 43.4% interest; Purcell Energy, 24%; Berkley
Petroleum, 21%; Anderson Resources; and others.
For a copy of the NEB report, see the Web site at www.neb.gc.ca,
or call (800) 899-1265.
Carolyn Davis, Houston
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