Canadian gas production was up 2.4%, or 300 MMcf/d, during the first quarter compared to first quarter 2001, according to statistics compiled by Lehman Brothers. However, Lehman analyst Thomas Driscoll said he expects production to decline between 1% and 6% over the remainder of the year based on historical trends, leaving year-end production up as much as 1% or down as much as 4%.

A lot depends on the future of the Ladyfern field in northeastern British Columbia. Ladyfern production is expected to decline sharply either this year or next year without additional discoveries in the area. Without Ladyfern additions in the first quarter, total production volumes would have declined almost 2% from 1Q2001, Driscoll said. Ladyfern currently is producing 720-730 MMcf/d and is expected to reach a peak of 785 MMcf/d before making a one-time 70% drop, possibly as early as this year.

Nevertheless, natural gas well completions have risen sharply this winter, opening the possibility that additional production from western Canada could be in the mix. During the five months ending March 2002, there were 4,233 western Canadian gas well completions, an 11% increase (406 well completions) from the same period last year and last year was the most active in the previous five years.

April production appears to be responding. Western Canadian production is up 3% over the first quarter average to 14.8 Bcf/d, said Driscoll. Western Canadian production month-to-date April 25 is 1% above year-ago levels.

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