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Rockies on a roll: natural gas production grows
Gary Park For Petroleum News
The United States Rockies region, one of the few North American regions where natural gas production is on a growth curve, could see output climb by 3 billion cubic feet per day over the next eight years to 16 bcf per day, Calgary-based consultant Ziff Energy Group has forecast.
In a production outlook, the firm said the bulk of the increase would come from new tight gas wells.
Dana Bozbiciu, a senior analyst at Ziff, said in a news release that “higher new gas well productivity due to improvements in tight gas completion technology has more than offset reductions due to maturity of some gas basins.”
The report said incremental new pipeline capacity, including the Rocky Mountain Express or REX and other projects, along with rising local demand will absorb most of the production increase.
REX to deliver 1.8 bcf by ‘09 The building interest in the Rockies is reflected in the REX venture by Kinder Morgan, Sempra Pipelines and ConocoPhillips to deliver 1.8 bcf per day from Colorado to Ohio, where it can flow on to the U.S. Northeast, with peak volumes expected by mid-2009.
There is also a plan in the works by Questar and Enterprise Products Partners to build a 2.5 bcf per day natural gas pipeline in western Colorado, linking a processing complex with as many as six interstate systems.
Enterprise has committed 1.5 bcf per day of firm capacity and Questar has added 500 million cubic feet per day.
Contingent on regulatory approvals they hope to have the hub in service in the final quarter of 2008. The initial phase is designed to treat and process up to 750 million cubic feet per day and extract up to 35,000 barrels per day of natural gas liquids.
Among producers, the Rockies is the largest single U.S. region for Canadian independent EnCana, which posted 523 million cubic feet per day from its Jonah field, in Wyoming, in the second quarter, up 73 million cubic feet per day from a year earlier.
REX would back out U.S. gas Bentek Energy has estimated the REX pipeline tolls and gas from the Rockies will be able to back out gas from the Permian and Anadarko basins, but not displace gas from Western Canada.
Bentek President Porter Bennett told a gas strategy conference in Denver in August that REX will offer the lowest shipping cost in North America except for the Alliance Pipeline from British Columbia to Chicago.
He expects that as unconventional gas from the Rockies and Texas starts to increase and once REX comes into full service, those factors will put downward pressure on North American prices.
Bennett told the conference that domestic U.S. production will more than make up for the decline in Canadian imports.
Bentek said production of 13.45 bcf per day last year in the Rocky Mountain states was up 5.6 percent from 2005 and is likely to add another 600 million cubic feet per day by the end of 2007, while Canadian shipments to the U.S. Midwest are off by 400 million cubic feet per day and to the U.S. Northeast by 157 million cubic feet per day.
The U.S. Gas Potential Committee has estimated the Rockies have more than 200 trillion cubic feet of remaining resource, most of it unconventional reserves.
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