After years of having been plagued by low prices relative to theHenry Hub, Rocky Mountain producers appear to be well positioned tohelp meet the projected 30 Tcf gas market. Even when Canada isconsidered, less gas has been drawn from Rockies basins on apercentage of projected reserves basis than from other NorthAmerican producing regions, noted Thomas A. Petrie of PetrieParkman & Co.

Speaking at the Colorado Oil & Gas Association’s RockyMountain Natural Gas Strategy Conference and Marketing Fairyesterday in Denver, Petrie noted since the early 1990s, overalldecline rates have grown steadily from around 14% to around 23%last year. “If we look at the individual regions we find the Gulfof Mexico…virtually doubling the rate of decline over that sameperiod. And even if we look at Canada we see quite an accelerationin the Canadian rate of decline during this period from some 9% to18%.”

Petrie attributed the Canadian phenomenon to a focused effort byproducers there to expand areas of exploration and production.While Canada has plenty of reserves, “I think we do need torecognize that at least this round of low hanging fruit in theCanadian provinces, especially Alberta, has been well exploited,and the need for price benefits to unlock the next resource base isgoing to be there.”

With all that in mind, Petrie said it is interesting to look atthe position of the Rockies and how it fits in with the projectedsubstantial growth in U.S. gas demand.

Looking at the West, the reserve potential is in the 100-plustrillion cubic feet range, as estimated by the Potential Gas SupplyCommittee, but only 42% produced at this point, Petrie said. Incontrast, many other producing regions are running in the 70%-plusrange for reserves produced. “Even in other areas, the Midcontinentfor example, we’re talking about a 67% produced rate already. Andthen if you look at Colorado, Wyoming, Utah on the same basis,we’re looking at something where the estimates would be some 27%produced.

“The degree of maturity of the [Rockies] resource base is in adifferent category just as the degree of maturity in the declinerates, the profile of the decline rates, is in a differentcategory.”

As for decline rates in general, Petrie said he is struck by howmuch talk there is about technological improvements. “I wouldsubmit for your consideration the notion that the technologicalimprovements with respect to completion technology, and thereforerates of depletion, have exceeded discovery technology or theadding to the reserve base from the resource base. And that meansthat we’ve had a compression of reserve life and an acceleration ofrates of depletion.”

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