Western Canadian natural gas wellhead deliverability has declined more than expected despite a higher than expected drilling rate last year, the National Energy Board (NEB) said in its December 2002 Energy Market Assessment of Short-Term Natural Gas Deliverability from the Western Canada Sedimentary Basin (WCSB) 2002-2004. The NEB projects that by the end of 2004 deliverability from WCSB wells will have fallen by a total of 710 MMcf/d from December 2001 levels and by 375 MMcf/d from levels at the end of this year.

“[D]ecreasing initial productivity per connection and increasing decline rates, which started in 1996, have continued into 2002,” the NEB said, adding that producers are getting on average about 25% less per well than they were able to produce from wells drilled in 1995. “However production data for 2001 connections indicate that initial productivities and decline rates appear to be stabilizing at the 2000 rates.”

Nevertheless, the cumulative decline in well productivity means that producers today must drill a much greater number of wells to increase or just maintain current production levels.

The Board said that it expects drilling to continue rising, resulting in about 12,000 connections (or gas producing zones) by 2004 compared to only 4,800 in 1996. “However this high activity will not offset the effect of lower initial productivity per connection,” the Board said. “Based on these trends, the Board expects deliverability to decrease from 16.6 Bcf/d in late 2001 to 15.9 Bcf/d by the end of 2004.”

The NEB’s outlook includes only the WCSB and does not represent total Canadian deliverability. It also is restricted to conventional supplies, doesn’t include coalbed methane development, tight gas, nor the potential of finding another field similar to Ladyfern, which provided a substantial initial amount of production in 2001 but is expected to decline quickly and sharply. “This type of discovery that is produced at high initial rates could offset the anticipated decline over the outlook period,” NEB said.

Board Chairman Ken Vollman said the report “reinforces the Board’s view that industry is responding well to changing market conditions, as is clear from the high rates of drilling we have been seeing.”

Deliverability is expected to increase in several regions of the WCSB between now and the end of 2004. While Ladyfern deliverability is expected to drop by 250 MMcf/d over the next two years, total deliverability in the Plains region of British Columbia, where Ladyfern is located, is expected to rise by 100 MMcf/d. Increases also are expected in the Alberta Foothills Front area and Southwestern Saskatchewan.

The NEB is planning the release of another report on the longer term outlook, titled Canada’s Energy Future: Scenarios for Supply and Demand to 2025, in the spring of 2003. For a copy of the current report go to https://www.neb-one.gc.ca,

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.