Rocky Mountain gas producers heard encouraging news on the rolethey could play in helping the industry achieve a 30 Tcf market by2010. Several speakers at the Colorado Oil & Gas Association’sannual conference earlier this month in Denver delivered themessage that it’s largely up to the Rockies to make that kind ofmarket growth a reality.

“Gas supply from the Rockies will be a major contributor tomeeting the growing demand, and it has a bright future,” enthusedWilliam J. Barrett, CEO of Rockies producer Barrett Resources Corp.”It’s apparent that many people in our industry have not recognizedor have underestimated the full potential for growth in bothreserves and production of domestic gas from the Rocky Mountainbasins. And it is huge.”

That’s a belief held by the Coastal Corp. and its CEO David A.Arledge. “Expansion in the Rockies is one of the cornerstones ofour corporate exploration and production strategy,” he toldconference attendees during a keynote address.

Unlike other U.S. supply regions, the Rockies is not nearly astapped out, according to Thomas A. Petrie of Petrie Parkman &Co. Looking at the West, the reserve potential is in the 100-plusTcf range, as estimated by the Potential Gas Supply Committee, butonly 42% produced at this point, Petrie said. In contrast, manyother producing regions are running in the 70%-plus range forreserves produced. “Even in other areas, the Midcontinent forexample, we’re talking about a 67% produced rate already. And thenif you look at Colorado, Wyoming, Utah on the same basis, we’relooking at something where the estimates would be some 27%produced.”

Petrie noted since the early 1990s, overall decline rates havegrown steadily from around 14% to around 23% last year. “If we lookat the individual regions we find the Gulf of Mexico…..virtuallydoubling the rate of decline over that same period. And even if welook at Canada we see quite an acceleration in the Canadian rate ofdecline during this period from some 9% to 18%.”

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

Arledge said the industry should turn to the Rockies to helpmeet its production goals. “If we’re going to get to a 30 Tcfmarket or a 28 Tcf market, or whatever you’re thinking about alongthose lines, we’re going to have to drill, produce and deliver alot more gas from the Rockies.

“I’ve seen studies that indicate that as much as 25% of theexpected U.S. demand growth by 2010 will have to be supplied fromthe Rockies. That translates into an incremental 5 Bcf/d, or anincrease of more than 50% from today’s production levels. Coastalbelieves that there’s great potential in the Rockies, and we’reacting on this belief.”

However, the challenge to produce more gas isn’t one of justexploration and production, particularly in the Rockies, saidJerald V. Halvorsen, president of the Interstate Natural GasAssociation of America (INGAA). Pipeline construction is criticalto get Rockies gas to market. “It’s going to be absolutelyessential to get more gas out of the Rockies if you’re going to getto 30 Tcf. For a while we thought that we were going to get somenatural gas from Mexico, but the demand in Mexico is growing soquickly that they’re going to need all their gas and gas from theU.S. If you talk to the Canadians, their demand is growing,although they’ve got some big new projects, they’re not making anypromises in the future.”

Joe Fisher, Denver

©Copyright 1999 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.