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The Great Canadian Gas Race

Northern gas rush proves timely for power generators.
Fortnightly Magazine - May 1 2002

another form of natural gas that you can bring if you can figure out how to make it work. There's a lot of stuff in the resource pile that's not economic yet that we spend a lot of time as an industry trying to figure out how to make it economic and as it becomes economic, all of sudden you've got a tremendously big source of new gas."

—M.H.

What about turning to Mexico for help? Currently, Mexico doesn't have enough gas to satisfy its own demand. Mexico's internal forecasts call for about 8 percent annual demand growth and about 6 percent annual supply growth. Mexico continues to be a net importer of gas from the United States, and also expects to help fill the gap through LNG imports.

"It's like the United States and Canada are a unit and seem to be producing like a unit. Mexico is a little different story," Woronuk says. "Mexico has traditionally imported gas from its northern unit. If that loosens up and we turn Mexico into a Canadian and U.S. type market, then I could see very well that Mexico could be a gas exporter by a significant amount. Whether it will surpass Canada and when depends on how rapidly we deplete Canada and how slow they are to develop Mexico."

By the time gas production from the traditional basins in the United States, Canada, and Mexico becomes uneconomical, other technologies are likely to be in commercial operation to replace conventional gas reserves, says Roland Schoettle, chief executive of Optimal Technologies, an electric power services company based in Calgary.

"I strongly believe that by the time we are out of natural gas reserves, ... we will have worked out the problems with fuel cells and hydrogen, and at the same time, there will have been some significant breakthroughs in making coal cleaner," Schoettle explains. "I think that right now, because natural gas is the cheapest of all these options, until it's gone or until we start getting closer to the end of its cycle, we're going to start to see other technologies come on board that we'll be able to take and fill in the gap."

For the foreseeable future, though, Canada's gas resource potential is expected to remain strong. "The prognosis is that the industry will be able to meet the challenge of supplying gas for the increased power generation," says Jim Osten, principal with the world energy services group of DRI-WEFA.

If you look at all of the less mature plays of the WCSB, the deepwater Gulf of Mexico, and the East Coast of Canada, "I think there's going to be pretty good gas supply in North America," says Larry LeBlanc, vice president of East Coast operations for PanCanadian Energy.

As long as demand doesn't dry up in response to some cataclysmic economic event, the financial incentives should remain ripe for Canadian upstream companies to throw healthy amounts of cash into exploration.

In the short term, however, patchy clouds hang over the North American producing sector. The industry is seeing a downturn in