Output

Unocal Corp. boasted record quarterly profit on Monday, but production told a different tale. Worldwide oil and gas production averaged 404,000 boe/d in the quarter, down from 463,000 boe/d in 2Q2003. On the natural gas side, the North American numbers were dismal, with a 26.2% drop in production to 593.7 MMcf/d from 804.8 MMcf/d in 2Q2003.

As the output from many of the natural gas producing basins in the United States declines and energy players focus overseas, the industry remains short on answers as to how North America will continue to feed its voracious appetite for gas.

As the output from many of the natural gas producing basins in the United States declines and energy players focus overseas, the industry remains short on answers as to how North America will continue to feed its voracious appetite for gas.

The 55% share of the Canada’s gas output that is exported to the United States has dropped for the eighth month in a row. The latest report on exports by the National Energy Board showed a 9.8% decline in volumes during August, to 293.9 Bcf compared to 325.8 Bcf during the same month in 2002. Exports dropped despite sharply higher prices and ample capacity on the pipeline grid for delivering as much gas as Canada can produce.

The 55% share of the Canada’s gas output that is exported to the United States has dropped for the eighth month in a row. The latest report on exports by the National Energy Board showed a 9.8% decline in volumes during August, to 293.9 Bcf compared to 325.8 Bcf during the same month in 2002. Exports dropped despite sharply higher prices and ample capacity on the pipeline grid for delivering as much gas as Canada can produce.

Since peaking last year in the second quarter with the top output from the Ladyfern field in British Columbia, Canadian gas production and exports to the United States have been on a slippery slope and that isn’t expected to change anytime soon.

Since peaking last year in the second quarter with the top output from the Ladyfern field in British Columbia, Canadian gas production and exports to the United States have been on a slippery slope and that isn’t expected to change anytime soon.

Given a trend of a 2%-2.5% a year decline in U.S. natural gas production and stable Canadian output, North American production overall appears “likely” to deteriorate at least 0.5-0.75 Bcf/d a year for the foreseeable future, according to a survey by Southwest Securities. Meanwhile, the latest rig counts suggest Canadian producers are getting a jump start on winter drilling.

A new deepwater gas discovery by Pioneer Natural Resources will bring gas output from the Falcon Nest platform to about 400 MMcf/d in the next 12 months, the company said last Wednesday.