Wellhead freeze-offs and other cold-related delivery problems in Canada in January led to a sharp 562 MMcf/d drop in pipeline receipts from December 2003 levels to 15.419 Bcf/d, according to a survey by UBS analysts.

Although the decline was off significantly from the December peak, it was down about 1.2% (180 MMcf/d) compared to the same month last year. UBS still expects the rapid pace of drilling in Canada to lead to a 0.9% rise in gas production this year to an average of 15.75 Bcf/d.

A UBS survey of pipeline field receipts representing about 95% of Canadian gas production showed that the severe cold in January, including the below normal average of minus 15.5 degrees Celsius in Edmonton, AB, slowed production down by about 300 MMcf/d. “Our survey indicates Nova field receipts averaged just 10.168 Bcf/d in January, down 0.285 Bcf/d or 2.7% versus the same month last year,” UBS said in its North American Gas Market Outlook. “In fact, production onto the Nova system was the lowest monthly average in our data that goes back to November 1995.

“Nevertheless, despite the cold weather, production was up year over year on both the Westcoast system in British Columbia and the TransGas system in Saskatchewan where field receipts were up 4.4% and 2.3% respectively year over year,” the analysts added. “On the East Coast of Canada, Sable Island production averaged 0.400 Bcf/d in January, essentially unchanged from the same month last year.”

UBS noted that Sable producers made up for the declines in the Venture, North Triumph and Thebaud fields by connecting the Alma field at the Sable Offshore Energy Project.

Meanwhile, gas drilling continues at a record pace in Western Canada. According to data gathered by Daily Oil Bulletin, a record 1,463 new gas wells were drilled and completed in Western Canada in January, up 53% from the same month last year.

UBS analysts forecast that the Canadian gas industry will complete 13,000 new gas wells this year, falling short of last year’s record pace of 13,939 wells. “We expect, however, drilling activity will be more evenly distributed on a seasonal basis than in 2003,” when the majority (63%) of the drilling and completion work took place in the second half of the year.

“With drilling activity expected to remain relatively strong, we project Canadian natural gas production will rise 0.9% in 2004 and average 15.756 Bcf/d, up 0.138 Bcf/d versus 2003 but essentially unchanged from December 2003’s average of 15.769 Bcf/d and down from 2003’s year-end exit rate of 16 Bcf/d.”

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