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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Donaldm who wrote (61323)	3/2/2000 5:03:00 PM
From: Archie Meeties	Read Replies (1) \| Respond to of 95453

e-mail this piece to Larry. Tell him there's room enough in the patch even for an unbeliever. Canada eager for impact from U.S. gas squeeze While the U.S. gas industry braces for a deliverability crunch and possible price-spikes this coming summer, gas experts from the United States and Canada are confident Canada will not experience such conditions, and will benefit from increased prices. Bob Morris, a financial analyst with PaineWebber, said last month the United States will undoubtedly face delivery problems this summer (GD 2/17). For a variety of reasons, gas deliveries have dropped by 2.5 billion cfd, and storage inventories will drop below 1 trillion cf by the end of withdrawal season, he said. Moreover, he noted, the United States won't be able to lean on Canada, which will have its hands full already with its own deliveries. Patricia Mohr, vice president of economics at Toronto-based Scotiabank, disagrees. "Canada has a large energy resource," she said this week. "Gas supply might be very tight for both domestic use and exports, but we will not experience a physical shortfall in gas." Earl Sweet, assistant chief economist at the Bank of Montreal, agreed. "Canada produces more gas than what we need," he said. "The mismatch between demand and supply" in the United States has not happened with Canadian storage this winter, he said. The United States will require more and more imports from Canada in the future, he added. Sweet said he can't imagine Canada having a gas supply shortage this coming summer. Even so, he noted, "Canadian prices follow U.S. prices -- which will quite certainly go up -- as well as [U.S.] demand. It means we will export more gas to the U.S. with a higher price. It's good for our economy." Mohr and Sweet both think the only substantial impact of any U.S gas pinch will be increased prices. Mohr predicts summer prices will reach their highest level in years. "It's good news for Canadian producers," she said. But domestic customers and gas-importing U.S. customers alike will have to deal with a higher rates, she said. Still, Sweet noted Canadian customers have already been paying a higher rates since last year. "Although the price will probably rise more, I don't think it will be such a big deal," he said. Canadian gas production last year reached 6.1 trillion cf and exported 3.1 trillion cf. In 2000, production may rise to 6.3 trillion cf, according to the Canadian Assn. of Petroleum Producers (CAPP). CAPP also puts Canada's gas resources at about 579 trillion cf. Storage levels reported by the Canadian Gas Assn. (CGA) -- in a weekly report similar to the one issued by the American Gas Assn. -- also suggests a tightness in supply. For the week ending Feb. 12, 1999, working gas in Canada's eastern region was 125.1 billion cf, and western storage stood at 149 billion cf. For the week that ended Feb. 18, 2000, the East held only 78 billion cf, the West 122.5 billion cf. Canadian production has decreased recently. Mohr noted actual productivity per well has dropped and delivery of gas on the Nova Pipeline system has not increased as much as expected. "We're also concerned about the Alliance Pipeline, which will come online in October, and which will substantially increase the demand for gas to fill the pipe," she said. In addition, she said, the Sable Island gas project has also increased demand. "Canada has a large amount of proved reserves, but we have to find a way to take the gas out to meet the needs of the market," she said. Along with some recent gas discoveries, Canada will have to drill more wells in Alberta's Western Sedimentary Basin and off the East Coast, Mohr said. "Canada will have no problem delivering gas to all customers -- perhaps under a very tight situation -- but the increased prices are positive for us as an exporter," she said. naturalgas.com