National Energy Board Report - Canadian Natural Gas Output May Fall 15% In Next Two Years

[hatrack]

CALGARY - A major downturn in drilling for natural gas in Western Canada will shrink Canadian supplies of the clean-burning fuel by as much as 15% in the next two years, the National Energy Board predicted yesterday.

Canada's energy regulator said it expects Canadian production to plummet to as little as 14.5 billion cubic feet a day by 2009, revising earlier predictions that gas deliverability would stay flat at around 17 bcf/d, or roughly where it has been since 2000.

"There is a pervasive drilling downturn that's impacting most resources in the Western Canada basin, where 98% of the gas is produced," said NEB gas supply analyst Ken Martin. "We see it starting in mid-2006, and it's continuing on into 2007 to the current date, and it doesn't look like that there is anything that will pull us out of that in the short term."

The predictions add to the gloom hanging over the oil-patch that started last year with the decline in gas prices and intensified with last month's release of a report urging the province to charge sharply higher royalties and taxes on oil and gas projects.

EDIT

http://www.canada.com/nationalpost/financialpost/story.html?id=118893ff-4c8d-4ae9-a2db-eaec24021905&k=59392

[aquart]

1. Aren't they staking out mineral/drilling rights in the arctic?

[hatrack]

2. True, but the lead times are going to be substantial, even if it makes economic sense

And with gas at, what $7, I don't know how you're going to pay to drill for gas on Ellesmere Island . . .

[jpak]

3. So when do they stop exporting gas to the US???

:shrug:

[hatrack]

5. What?!? And abrogate NAFTA?!?

:sarcasm:

[GliderGuider]

8. Not on Little Stevie Harper's watch, that's for sure!

[GliderGuider]

4. Dave Hughes has an amazing Powerpoint from last year's ASPO Boston about this

He's a scientist with the Canadian Geological Survey out of the Natural Resources ministry.

His slides (PDF warning) show a 400% increase in wells drilled from 1996 to 2004, with production staying flat. Initial well productivity went down 71% over that time.

Canada's natural gas situation is critical, which this report emphasizes. I don't think it's a drilling downturn that's hurting us, though.

Say bye-bye tar sands.

[Delphinus]

6. In a nutshell,

you're saying (or Dave Hughes is) that the natural gas is simply not there to be extracted, correct?

[GliderGuider]

7. That's about the size of it.

It looks as though the remaining gas pools are now small enough that drilling is going to start falling behind demand. A lot is going to depend on rig availability, and there's a lot of competition for those puppies now.

[4dsc]

9. Didn't the ASPO state

that 50% of all US production has come from wells drill in the past 3 years and if we expect that to occur in the future, well you know its not going to happen..

This does not bode well for tar sands production or the US..

[hunter]

10. The sagging U.S. electric grid is propped up by natural gas imports.

I think the blind faith was that LNG imports from some unspecified place would keep the turbines spinning...

It's essentially a cargo cult on a grand scale -- as if we could build the pipelines and LNG terminals, and some mysterious market force would keep the natural gas flowing.