Despite continued declines from the once prolific Ladyfern field, Canadian Natural Resources achieved higher natural gas production and set a record for gas sales in the second quarter, with credit given to its successful exploitation program in Northwest Alberta. However, an Alberta regulatory requirement to shut in some gas production beginning Sept. 1 will drop the independent’s gas production at least 15-20 MMcf/d, with another 5-10 MMcf/d loss possible, depending on an appeal now being sought by the company.

In July, the Alberta Energy and Utilities Board (EUB) announced that 938 natural gas wells, which produce nearly 250 MMcf/d from the Athabasca Oil Sands Area, would be shut in beginning in September to preserve crude bitumen production (see NGI, July 28). However, gas producers were allowed to file temporary exemption requests, which would only be granted if the producers could prove their gas production would not have a negative impact on bitumen production. Canadian Natural filed an appeal on the 5-10 MMcf/d loss, but expects to lose at least 15-20 MMcf/d.

Canadian Natural also was hit by the continued declining gas output of Ladyfern. However, exclusive of Ladyfern, Canadian Natural’s North American gas production increased to 1.216 Bcf/d in the second quarter, up sequentially from the first quarter’s 1.189 Bcf/d. The producer also made record gas sales of 1.3 Bcf/d in the quarter, representing 48% of equivalent production in the quarter, as well as record crude oil and natural gas liquids sales of more than 240 bbl/d.

Through 2003, Canadian Natural expects production to average 1,280-1,330 MMcf/d of natural gas and 240 to 260 million bbl/d of oil and liquids. Third quarter 2003 production guidance would be slightly lower for gas at 1,278-1,302 MMcf/d, and flat for oil and liquids at 242 to 256 million bbl/d. “Third quarter natural gas decreases reflect lower seasonal drilling activity as well as regularly scheduled maintenance and the anticipated effect of the EUB order,” the company said.

During the second quarter, Canadian Natural drilled 224 net wells, including five stratigraphic test and service wells. A total of 55 net natural gas wells were drilled, bringing the total for the first half of the year to 299 net wells, an increase of 143% over the first six months of last year. The company also drilled 157 net oil wells during the second quarter, a 41% increase over the first half of 2002. Canadian Natural’s drilling program during the second quarter was highlighted by the start up of 32 summer shallow natural gas program in south Alberta. Through the third quarter, the company anticipates drilling about 100 shallow natural gas wells and up to 70 conventional and deep natural gas wells.

“Shallow natural gas programs in south Alberta, while integral to the company’s ongoing success, are not sufficient to offset normal production declines from winter access fields in other core regions; hence the company is expecting lower third quarter volumes when compared with second quarter natural gas production levels,” it said in a statement. “Successful deeper wells are expected to be in production by the fourth quarter, which will offset normal production declines to a greater degree.”

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