There will be no shortage of natural gas to fill the new wave ofCanadian export pipeline projects or a future generation offacilities yet to be born, according to veterans of the supplysector north of the international border.

Roland Priddle, who retired as chairman of the National EnergyBoard in January, told Gas Mart Power ’98 in New Orleans aconsistent pattern since the onset of deregulation and free tradein the mid-1980s suggests recent questions about Canadianproduction capabilities are academic. “It’s probably good fun forretired geologists,” Priddle said in refusing to indulge in thewidespread guesswork about ceilings on Canadian supplies.

He pointed out that the western Canadian industry has beendrilling at a rate of 5,000 gas wells annually and virtuallyreplacing production of 6 Tcf/year even though prices north of theborder remained depressed: C$1.80 per MMBtu in 1997 (US$1.25), oran average US$1.35 less than Nymex.

In Alberta, British Columbia and Saskatchewan, finding plusdevelopment costs remain just CDN70-80 cents (US50-58 cents). Heurged the U.S. industry to imagine the acceleration of fieldactivity ahead if prices in Canada only gain C50 cents (US35 cents)when export bottlenecks are cleared away by the forthcomingadditions to the export grid: 1.1 Bcf/d by the Foothills-NorthernBorder and TransCanada systems this year, then 1.3 Bcf by AlliancePipeline Project in mid-2000. Even the worst-case scenario outlinedin a study of the new projects’ effects on prices in the U.S. byIFC Kaiser leaves the Canadians with a gain of about US$1 comparedto 1997.

Priddle suggested current consensus forecasts byindustry-supported agencies such as the Canadian Energy ResearchInstitute are probably conservative. CERI’s latest calculationscall for only a gradual, 30% increase in exports to 3.9 Tcfannually over the next 15 years. “I tend to think those might be onthe low side,” Priddle said.

The fledgling offshore branch of the Canadian industry in NovaScotia alone is expected to contribute new exports of up to 1 Bcf/dwell within the CERI forecast period. The Sable Offshore EnergyProject , now under construction along with allied Maritimes &Northeast Pipeline, is only the beginning for a truly “formidable”addition to the supply scene, said Paul Bennett, Nova Scotia chieffor senior SOEP partner Mobil Canada.

With more than a year left before their in-service targets ofNov. 1, 1999, SOEP and M&NE already show clear signs ofbecoming “seed” projects setting off expansion, Bennett said. Hepointed to a spring auction of Nova Scotia drilling leases thatfetched multiple bids including a record C$66 million (US$48million) from Chevron Canada Resources (a wholly-owned unit of itsnamesake U.S. parent).

Bennett predicted that an additional 2 Tcf of known reservesnext door to SOEP’s 3.5 Tcf could be added within five years.Within 10 years, production from the SOEP area 135 miles east ofHalifax could be doubled just by adding to the production systemand adding compression to M&NE.

Taking into account estimates of the gas endowment for all ofAtlantic Canada, Bennett said “the prospects are staggering.” Theregion is currently thought to harbor 102 Tcf, counting the ScotianShelf, the Grand Banks of Newfoundland and the shallows offshore ofLabrador.s

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