Thaw hits Canada gas

A squeeze on Canada’s natural gas producers is turning into a chokehold as an early spring affects drilling that was already suffering from weak commodity prices, bulging storage inventories and high upstream costs.

As the thaw spreads and road bans take effect, operators are unable to move or set up heavy equipment until firm ground returns in the summer. But the normal peak winter drilling season was less than stellar in any event. Well permits issued by regulators in Western Canada slumped 13 percent to 2,677 licenses in the first two months of 2007, caused largely by a 39 percent decline in coalbed methane wells and a 30 percent drop in conventional gas wells. Less than one in five of the wells completed in the first two months were exploratory, the lowest percentage in many years, lending weight to 2007 forecasts of a 15 percent slump in completions to 19,000.

—Gary Park