Natural gas reserves in Canada declined 2% last year to 59.7 Tcf, replacing only about 79% of 2000 production, the Canadian Association of Petroleum Producers (CAPP) said in its 50th annual estimate of Canada’s crude oil and natural gas reserves. CAPP said it was similar to the level of reserve replacement in 1999 and reflects a continued focus on shallow gas drilling. Canadian conventional crude oil reserve additions, including offshore Atlantic Canada, replaced 131% of 2000 production.

Natural gas reserves in the Western Canada Sedimentary Basin decreased 2% from year-end 1999 to 56.9 Tcf. The industry replaced 81% of its 2000 production in the West versus 83% in 1999. In 2000, regional drilling followed the recent trend with more than 50% of all Alberta gas wells drilled in the shallow southeast part of the province where reserves are well defined and, in many cases, are already booked.

“By its nature, our industry is highly capital intensive,” said John Richels, chair of CAPP’s Fiscal Executive Policy Group. “Last year, we invested close to $23 billion in Canada — in the conventional areas of the Western Sedimentary Basin, northern Canada, in the oil sands and on the East Coast — making the oil and natural gas industry the largest private-sector investor in Canada. Our industry has to reinvest just to sustain the current production levels.”

The decline rates of wells drilled in well-defined areas, combined with the positive results recently seen in areas like British Columbia’s Ladyfern region, will likely result in industry placing a greater emphasis on the deeper regions of Alberta and British Columbia and looking north to the Northwest Territories and the Yukon, Richels added.

In British Columbia, the industry replaced just over 150% of its 2000 gas production. Reserves increased to 8.9 Tcf. Gross additions in Saskatchewan more than doubled 2000 production, increasing reserves from 2.4 to 2.7 Tcf. In the Atlantic there was a reduction in remaining reserves as a result of production at the Sable Offshore Energy Project.

CAPP forecasts lower gas prices in 2002 and suggests that drilling will decline from this year’s record of more than 10,000 wells. However, gas drilling will still be quite strong, the third highest on record. Outstanding drilling results from Northeast British Columbia and the Alberta Foothills over the last two years will likely result in an increased focus on these areas, CAPP said. Drilling in the shallow gas areas is expected to remain strong.

Canada’s crude oil and equivalent reserves increased by almost 400 million barrels in 2000, said Richels. Conventional oil reserves in western Canada increased moderately to 3.5 billion barrels in 2000, replacing 104% of production. This was in large part due to producers in Saskatchewan replacing 154% of it production. Alberta replaced 74% of production. Atlantic Canada offshore reserves at the Hibernia and Terra Nova projects increased by 136 million barrels after production because of new drilling that resulted in a re-assessment of existing reserves.

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