Northern gas rush proves timely for power generators.
Mark Hand is senior editor of Public Utilities Fortnightly.
Upside potential is what will attract producers to Canada for years to come and what will help quench the thirst of new gas-fired power generation plants in the United States. Opportunities abound north of the border, where the natural gas resource remains an under-explored asset base.
U.S. companies are very aware of the strategic value in investing in Canadian companies that hold title to lands in the less developed lands of the Western Canadian Sedimentary Basin (WCSB). The Canadian energy sector, for example, saw almost $20 billion in mergers and acquisitions in 2001, far exceeding the $9 billion worth of energy M&A activity in 2000.
The strong interest in the Canadian exploration and production (E&P) sector bodes well for merchant power plant developers in the United States keen on operating their plants with an economical fuel that also enjoys a favorable environmental record. In fact, successful drilling programs in the deeper plays of the WCSB, offshore Nova Scotia and, eventually, the Arctic, should produce adequate reserve replacements for the next couple of decades.