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Politics : Rat's Nest - Chronicles of Collapse -- Ignore unavailable to you. Want to Upgrade?

To: Ron who wrote (5987)	6/13/2007 10:15:27 AM
From: Wharf Rat	Read Replies (1) \| Respond to of 24225

Not to worry; Alberta's tar sands will save us. Just takes burning some nat gas. canada.com Alberta's era of abundant natural gas coming to an end Oilsands, coal-bed methane will be hard put to replace lucrative gas royalties Gordon Jaremko, The Edmonton Journal Published: Monday, June 11, 2007 EDMONTON - Age is overtaking the top money earner that paid off the provincial deficit and fuelled budget surpluses as energy prices rose since 1999. After more than half a century of growth as the Canadian supply mainstay Alberta natural gas production has peaked and entered a decline that will continue no matter how much drilling is done, the province's industry watchdog agency says. In its latest annual reserves report, the Alberta Energy and Utilities Board said it "has concluded that natural gas production in the province peaked in 2001." Despite vigorous field activity in 2005 and most of last year, "natural gas production in 2007 is expected to decline by 2.2 per cent compared with 2006." Gas accounts for up to 75 per cent of provincial royalties and mineral rights sales. Barring surprises from the royalties inquiry now underway, the more expensive and lightly taxed oilsands are expected to remain less lucrative for the Alberta treasury. At best, the industry will only hold the gas decline down to a gradual rate, partly by expanding fledgling coalbed methane output to the extent that technical advances and environmental resistance permit, the AEUB predicted. "High levels of drilling in the past four years have prevented a sharp decline in production," the board said. But the results of the hot activity confirmed that supply growth is out of the question, the annual reserves review indicated. Alberta production hovered last year at the same volume as 2005 output -- 4.9 trillion cubic feet, or gas equivalent to 817 million barrels of oil. The number refused to budge despite frantic drilling fuelled by North America-wide supply scares and price spikes after hurricanes damaged production in the Gulf of Mexico region, the AEUB reported. Producers drilled 12,062 successful gas wells last year and 13,271 in 2005. The AEUB forecasts 12,000 new producing wells this year as the drilling pace stays moderate to slow. Activity is forecast to revive to an annual average 13,000 wells in 2008 through 2016. Coalbed methane, only produced commercially in Alberta since 2002, still shows no signs of fully making up for the decline in conventional gas. The new supply source remains too young for the AEUB even to guess how successful industry will eventually be at tapping potential reserves estimated at up to 500 trillion cubic feet, or methane equivalent to 83 billion barrels of oil, in coal formations that carpet much of the province. The AEUB calls the new supply source a "supplement" for conventional gas, not a replacement. Growth is not guaranteed. Investment in coal-seam gas is turning out to be as easily undermined by lows on the price cycle as its nearest counterpart in conventional operations, shallow drilling on the flat and easily accessible plains of southeastern Alberta. Both specialties, while prone to rapid acceleration when prices rise, also slow down quickly during market lulls. Low well output rates effectively increase production costs, making shallow drilling and coalbed methane programs highly sensitive to price movements. 1 2 next page