The Federal Energy Regulatory Commission has ordered natural gas producers in Kansas to refund to customers approximately $500 million for erroneously adding the state's ad valorem tax onto...
The Great Canadian Gas Race
production in the United States, and flat production rates on average in western Canada, due primarily to the warmer-than-normal winter, economic recession, and high underground gas storage levels.
At Cambridge Energy Research Associates' (CERA) annual energy conference in Houston earlier this year, CERA Director Robert Esser predicted the decline in gas exploration drilling in the United States that began in mid-2001 will result in a loss of 4 Bcf/day of gas production. Esser says most E&P companies base their economic models on $3/Mcf gas and $22/barrel oil and begin to scale back production when prices fall below those levels.
The Big Elephants
Since last summer, production rates appear to have followed Esser's modest trend. But even Esser's prognosis has a silver lining. He sees bright spots in Canada, especially in the Ladyfern field-which spans northern Alberta and British Columbia-the Northwest Territories, and the Scotian Shelf. "There's plenty of potential to keep production up," Esser says.
A closer look at the Ladyfern statistics shows why it generates so much enthusiasm. Industry analysts estimate the Ladyfern area could contain as much as 1 Tcf of gas, making it the biggest gas find in western Canada in the past 15 years. Ladyfern currently produces about 500 million cfd from about a half dozen wells.
An area rich with natural gas does little good, though, if you don't have a means of transportation to bring the fuel to market. In the case of Ladyfern, TransCanada PipeLines worked with Ladyfern producers-Murphy Oil, Apache Canada, Alberta Energy and Canadian Natural Resources-to ensure that most of Ladyfern's production volumes are directed into TransCanada's Alberta System.
Exploiting the potential of the WCSB in northeastern British Columbia has been slowed by the provincial government, which in the past emphasized the development of its fishing and forestry industries to the detriment of the oil and gas industry. A new government in British Columbia, however, is "taking a more open view and opening its arms more to the industry," Woronuk says.
"And the industry is looking very strongly at B.C., saying 'look, here's a portion of the basin that has been less depleted and less developed than Alberta and Saskatchewan and we're welcome in there,'" Woronuk explains.
With the B.C. government beginning to recognize the potential of the WCSB, the rush is on to tap into the province. But producers still need to put up the cash in order to stand a chance of hitting pay dirt.
"With that type of remarkable luck in northeast B.C. and the southern Yukon and Northwest Territories, producers are looking very carefully in those areas for their big elephants," notes Bill Gwozd, manager of gas services for Calgary-based consultant Ziff Energy. "I'm convinced they will find them. I'm convinced that all of the big, top pools have not been discovered. As you go through the laundry, you're going to keep on looking around and keep on finding them."
Gwozd says it's the Ladyfern and Fort Liard type of discoveries that are helping to drive the merger and acquisition trend in Canada. "Successful wells like Ladyfern make the