shortage of natural gas projected...
HOUSTON (Reuters) - Despite a two-year rise in drilling activity in the
Gulf of Mexico, industry analysts warn the discovery of new reserves of
natural gas is not keeping pace with rising U.S. demand.
As demand increases in coming years, producers will likely be forced to
look deeper for supplies or turn more to Canada to meet the shortfall,
industry analysts and officials said this week.
''We're not replacing reserves. We're drilling more wells, but we're not
showing a net benefit,'' Gregory Shuttlesworth, managing director with
PIRA Energy Group, told participants at GasFair, an industry conference
held here.
The number of rigs searching for natgas in the United States increased
nearly 30 percent last year, while gas production rose 1.2 percent to
ust more than 19 trillion cubic feet (TCF).
At the same time, U.S. gas consumption edged up slightly to about 22
TCF, leaving a three TCF gap that in the short run must be filled by
tapping gas from underground storage facilities and boosting imports
from neighboring Canada.
While production from shallow, offshore Gulf of Mexico fields has been
flagging, Shuttlesworth noted deepwater fields were starting to yield
better results.
''In deepwater, we've had some pretty impressive reserves, but it's an
extremely difficult frontier. There's a lot of expenditure,'' he said.
Cynthia Quarterman, director of the U.S. Minerals Management Services
(MMS), said technological advancements have lowered exploration and
development costs and helped companies like Shell Oil and Amoco Corp
open up Gulf of Mexico fields at depths of 5,000 feet or more.
Analysts said the volume of natgas from such deepwater fields could
amount to as much as three billion cubic feet-per-day (BCFD) this
year,up sharply from about 2.2 BCFD in 1997.
''The deepwater Gulf (of Mexico) promises to be a significant area for
exploration and production. The last four (government) lease sales in
the central and western Gulf were record breaking,'' Quarterman said.
Industry officials said increased imports from Canada also will help
close the supply gap despite flat growth last year, when fields were
already flowing at near capacity.
''There's a significant price differential between Alberta and the
Midwest which has helped drive exports. Gas is looking for the highest
priced market,'' said Terrance Rochefort of Canada's National Energy
Board (NEB) in Calgary.
Canadian exports to the United States last year held steady at about 2.8
tcf, or 13 percent of U.S. consumption. That rate has nearly tripled in
10 years, but Canada, too, has seen a significant decline in its
reserves-to-production ratio, leaving some concerned there will not be
enough gas to fill new pipelines now in the planning stages.
Rochefort said there were several major line expansions planned over the
next one to two years that will move more Canadian gas to the U.S.
Midwest and Northeast.
Some of the biggest are:
-- Northern Border's expansion from Alberta to Iowa designed to move 900
million cubic feet per day (mmcfd), and a line from Iowa to Chicago
designed to move 650 mmcfd. Both are targeted to start operation in late
1998.
-- Viking Voyageur, a joint venture between TransCanada Pipelines
Northern States Power and Northern Illinois Gas slated for late 1999, is
designed to deliver up to 1.3 bcfd to Chicago.
-- Alliance Pipeline, whose partners include IPL Energy, Fort Chicago
Energy Partners, Coastal Corp, Westcoast Energy and others, will ship
1.3 BCFD to Chicago from northern British Columbia starting sometime in
2000.
-- In eastern Canada, the Maritimes and Northeast Pipeline, a joint
venture of Duke, Mobil and Westcoast, will ship about 440-460 mmcfd of
production from the Sable project off Nova Scotia to Canada's eastern
provinces and New England. |
