3
CALGARY — Deliverability of Canada's conventional natural gas will decline by 7 to 15 per cent during 2007-2009 as a result of lower drilling activity, but other sources should fill the gap, the National Energy Board says.
In a report released Wednesday, the NEB says gas deliverability will decrease from 483 million cubic metres per day as of the end of 2006 to a lower range between 410 and 449 million cubic feet per day in 2009.
“The drilling pace that sustained Canadian natural gas deliverability is gone, for the moment,” board chairman Gaetan Caron said in a release.
However, “we see cause for optimism as deeper drilling and improved techniques help producers deliver tighter gas from deeper wells. In the longer term, Canadians should rest assured that their natural gas needs will be met as other sources, such as unconventional gas, liquefied natural gas, or gas from frontier areas, enter Canada's energy market.”
Canada is the world's third-largest producer of natural gas, after Russia and the United States. Natural gas exports from Canada were valued at $27-billion in 2006.
Most of the country's natural gas resource is in the Western Canada Sedimentary Basin (WCSB), where in recent years the average production from new wells has decreased gradually as the basin matures.
High levels of new drilling and exploration activity driven by high demand and prices for natural gas helped maintain the overall production levels of natural gas, despite rising costs for drilling and exploration. But in mid-2006, drilling slowed for several reasons.
The NEB said the reasons included “continued high costs including labour, the increasing Canadian dollar value affecting profit margins on U.S. exports, and stable, moderate natural gas prices reducing the return on investment.”
Another contributing factor was competing investment in oil and oil sands development.
Current drilling is increasingly focused on the deeper western side of the WCSB.
“This area requires more complex drilling that is more expensive, but, the potential for larger returns is high,” the NEB said. “Producers will continue to develop and improve their techniques to unlock the more challenging gas resources.”
Coal-bed methane (CBM) is “another positive story,” the NEB said.
The board report projects continued growth in coal bed methane, though more moderately than 2003-2006, to about 23 million cubic metres per day by 2009, up from 14.5 million cubic feet in 2006.
The NEB is an independent federal agency that regulates several parts of Canada's energy industry.
