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

To: debra vogt who wrote (12344)	2/23/1998 4:18:00 PM
From: debra vogt	Respond to of 95453

FWIW: Record Canada gas drilling not certain in '98 -AEC February 23, 1998 03:50 PM CALGARY, Feb 23 (Reuters) - Warm weather in western Canada this winter threatens to throw cold water on predictions that the country's energy industry will drill a record number of natural gas wells in 1998, Alberta Energy Co Ltd Chief Executive Gwyn Morgan said on Monday. A lower-than-expected number of gas wells could wipe away Canada's long-standing gas surplus and drive prices up when the industry is faced with filling 1.1 billion cubic feet a day of new pipeline capacity coming into service in November. "We look like we are about to have had one of the shortest drilling winters in history. In fact, our own people plus other companies are saying that the rigs are already having to be pulled out," Morgan told Reuters after a speech to an industry conference. "So this could be a year when not as much gets done as people had hoped." The bulk of gas drilling in Canada is done in the winter before "spring breakup," when melting snow and ice forces road bans in many regions, temporarily halting much activity. Don Herring, president of the Canadian Association of Oilwell Drilling Contractors, said his members were concerned that this year's winter drilling season could end up to a month earlier than it usual does. The CAODC has predicted the Canadian industry would drill a record-breaking 16,600 oil and gas wells this year. Of those, about 60 percent were expected to target natural gas. That would beat the unprecedented activity in 1997, when 16,484 wells were drilled, 64 percent of which were gas wells. The association revises its initial projection each year when spring breakup arrives. Several industry executives, including the CEOs of major gas producers Poco Petroleums Ltd CA:POC and Anderson Exploration Ltd CA:AXL , have already predicted Canadian wellhead gas prices would pare a longtime discount to U.S. NYMEX prices when Northern Border Pipeline's and TransCanada PipeLines Ltd's TRP expansions come on stream in November of this year. Northern Border's much-awaited expansion and extension of the pipeline to the rich Chicago market will add 700 million cubic feet a day of new capacity, while TransCanada will add about 400 million cubic feet a day to its Canadian mainline. The proposed Alliance Pipeline, which is still embroiled in a Canadian National Energy Board hearing, would add another 1.3 billion cubic feet of export capacity in 1999. Record gas drilling had been expected this year to meet the higher exp[ort demand while arresting current declines in production within western Canada. Morgan, whose company is a major gas producer and operator of AECO-C Hub, western Canada's biggest storage facility and its main pricing point, said he believed Canada still had a surplus of gas, as evidenced by the continuing wide spread between Alberta and NYMEX prices. However, that surplus was depleting quickly, he said. "There is a real question as to whether or not the expanded Northern Border, TransCanada and Alliance will be full initially and I think that they probably won't be full initially," Morgan said. "But we've made real mistakes in the past by trying to project how much gas there was going to be, and every time we thought we had enough transportation we'd end up overshooting it." Another factor threatening a record well count this year was an expected drop in revenue as a result of low crude oil prices and a corresponding decrease in corporate capital spending, he said. ((Jeffrey Jones, Reuters Calgary Bureau (403) 531-1624)) REUTERS