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

To: Crimson Ghost who wrote (31044)	10/23/1998 8:51:00 AM
From: Tomas	Respond to of 95453

Oilpatch cuts spending by 28 per cent: CERI Calgary Herald, October 22 Tony Seskus and Chris Varcoe A dramatic drop in oil spending will signal a sharp 13-per-cent plunge in petroleum investment for this year, an energy think tank reported Wednesday. The cash-strapped petroleum industry will cut spending 28 per cent to about $4.6 billion for all of 1998, the Canadian Energy Research Institute said in a new study. Spending on natural gas -- the industry's lone bright spot this year -- will not improve enough to offset the overall slide, with investment on that side of the sector rising modestly to $7.13 billion from $7.03 billion in 1997. The study says companies will continue to shift spending to natural gas -- a move fuelled by oil prices wallowing in the $14 US a barrel range. About 60 per cent of projected spending will be gas-related over the next two years. "The first challenge facing producers will be to maintain those expenditures in the face of low crude prices," says the study's co-author, Len Coad. The increase in gas investment will lead to a significant increase in new wells, with 4,725 drilled this year in Western Canada, Calgary-based CERI says. Based on a survey of petroleum companies, the institute estimates 4,973 wells will be completed in 1999 and 5,297 in 2000. The projected fall in oil investment isn't a great surprise, given the year-long slump in crude prices, said Greg Stringham, vice-president of markets and fiscal policy for the Canadian Association of Petroleum Producers. Corporate cash flow levels, which fuel future oil and gas spending, have been punished by the weak oil prices, sparking concerns the Canadian industry won't be able to drill enough gas wells to meet increasing demand for the commodity. About 1.1 billion cubic feet of gas pipeline capacity is expected to come on stream this winter by TransCanada PipeLines and Northern Border. The ambitious Alliance pipeline will add another 1.3 billion cubic feet daily of gas in 2000. The survey indicates gas deliverability will rise nine per cent annually from 1997 to 2000. Coad said increased gas drilling should bring enough on stream to fill new pipeline space and replace declining reserves, but the timing appears tight. "The momentum that was established in 1997, and has been pretty much maintained so far this year, has to be maintained and built on through the next three years," he said. "If that momentum disappears, because of crude oil prices or some other reason, we're less optimistic." Natural gas prices have been buoyant this fall and the sector is on pace to drill about the same number of gas wells as it did in 1997, Stringham added. "There is a significant amount of new capacity coming on this year,'' he said. "I don't think we will see a supply shortage ... with the higher netbacks that producers are seeing, we are still maintaining gas drilling.'' calgaryherald.com