With ceremonial taps on two cordless computer mice to power upthe high-tech control room in Calgary, Alliance Pipeline enteredservice amid forecasts that it will rapidly be put to full use.Alliance did not immediately announce the opening amount of gas inits 2,300-mile route from Fort St. John in northeastern BritishColumbia to Chicago. But industry sources said it was filling uprapidly after curing startup glitches that postponed the event fora month, with about 800 MMcf/d flowing or 60% of its scheduledvolumes. The line was installed with ability to take up to 1.5Bcf/d in order to guarantee service on its 1.325 Bcf/d inlong-term, firm transportation contracts.
Alberta Premier Ralph Klein, who wielded one of the mice whileCalgary Mayor Al Duerr tapped the other one, put the issue raisedby Alliance in a nutshell. “The challenge now is for producers tostep up to the plate and deliver the gas,” the premier said.
The producer community remained much more optimistic that itwill put all its export capacity to use sooner than expected byskeptical observers including financial analysts and the CanadianEnergy Research Institute. “It’s extremely busy out there rightnow,” said Pierre Alvarez, president of the Canadian Association ofPetroleum Producers. CAPP projects a year-2000 total of 9,000 gaswells in western Canada. The figure will be a record thatrepresents a nine-fold acceleration of the drilling pace only 10years ago, when Canadian prices were severely depressed in a rangeof C70 cents to $1/Mcf (US48-68 cents) by a glut of “trapped gas”owed to shortages of long-distance pipeline capacity thatultimately stimulated a producer group to launch the Allianceproject.
Producers continue to be vigorous supporters of Alliance,enthusiastically endorsing its in-service inauguration amid recordprices made possible by capacity additions that establishedconnections between Canadian and U.S. markets. “If you’re going tobring on a pipeline, today’s the day to do it,” Alvarez said. Gasproducers are not alone in being more optimistic about theirability to ramp up output than the industry analysts.
At TransCanada PipeLines, which is expected to experience thespace surplus resulting from Alliance, president Doug Baldwinestimated excess capacity on the system will average one Bcf/d thisheating season – just half to two-thirds of the amount forecast bythe pessimists. Producers caution against discounting theirability to increase output too much on the strength of pastperformance. The pessimistic forecasts project a continuation of apattern of low-cost drilling for small reserves on the westernprairies.
The projections downplay the likelihood of a significant shiftin the drilling pattern to costlier, deeper but much more prolificwells along the foothills of the Rocky Mountains and in northernAlberta and B.C. Alvarez said that while CAPP’s year-2000projections show a 53% in low-cost drilling in Saskatchewan, theyalso point to a comparable acceleration in the foothills andnorthern regions. The mid- to late-1990s reliance on cheap shallowdrilling just reflected the depressed gas and oil prices of theperiod, CAPP maintains. The difficulty of predicting Canadianproduction capacity is being compounded by a spreading reluctanceto disclose drilling plans and output targets. Canadian producershave been repeatedly burned on skittish stock markets for evennarrowly missing declared objectives.
Gordon Jaremko, Calgary
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