The National Energy Board has again been presented with assurances that supplies will continue to grow in western Canadian natural gas fields already reached by pipelines — this time by Westcoast Energy Inc. On the heels of an encouraging expansion application by TransCanada PipeLines Ltd., Westcoast described an improving supply outlook in an application to add capacity to its grid in British Columbia.

TransCanada predicted total gas output in the heavily exploited western provinces can still rise by about 15% to 20 Bcf/d until at least 2010. Westcoast forecasts up to 17% growth in productive capacity — to 2.8 Bcf/d from 2.4 Bcf/d — from fields in northeastern British Columbia and southern areas of the Northwest Territories and the Yukon. The new traffic is expected to continue to be divided up between Westcoast, Alliance Pipeline and the TransCanada-Nova system.

While saying drilling will naturally slow down from the torrid pace set in the 2000-01 and 2001-02 winter seasons as gas prices moderate, Westcoast projects sustained strength in activity by BC standards. “Forecasts for drilling indicate that there may be a 20% drop during 2002 as compared with 2001, but that would still represent the fourth-highest annual level on record.”

In a new forecast, the Petroleum Services Association of Canada predicts an overall 26% decline in drilling in the western provinces this year to 13,386 wells, thanks to deteriorating gas and oil prices. But the trade group, known as one of the Canadian industry’s most reliable forecasters, adds that BC will remain a hot spot with 674 wells drilled in 2002.

Westcoast, reporting results of a new internal study, expects the number of successful gas wells in its service territory to average 427 annually between 2001 and 2015 after the current rush tapers off. The new drilling is projected to find 10.4 Tcf of marketable gas reserves — or 11% more than the total of 9.4 Tcf currently connected to the Westcoast system. Westcoast’s expansion plan calls for a 10%, 200 MMcf/d increase in its capacity to a total of 2.1 Bcf. The C$338.4 million (US$215 million) project, scheduled for completion in the fall of 2003, includes additions of compressor power and 89.5 kilometers (56 miles) of new 42-inch diameter pipe along its mainline between Chetwynd in northeastern BC and an export point at Huntingdon on the border with the United States.

The new capacity is primarily booked by electric power operations using gas-fired generators, which have signed transportation contracts with an average duration of 27 years. The shippers include Canadian interests but the lineup is dominated by U.S. independent power generators and three county utilities in Washington state: Grays Harbour, Franklin and Berton. The plan matches expansion under way by the U.S. route connected to Westcoast for imports of BC gas into the Pacific Northwest states and Northwest Pipeline Corp.

Westcoast projects that gas demand in BC and the U.S. Pacific Northwest will grow at an average annual rate of 2.3% through 2016. Consumption by gas-fired power plants is expected to rise by an average 4% annually, while residential and commercial demand grows at a 1.9% rate and industrial use goes up 0.9%.

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