Alaska key to Western Canada’s pipeline future

Gary Park

For Petroleum News

Western Canada has all the natural gas export pipelines to the United States it may ever need unless an overland line from Alaska’s North Slope needs shipping space from Canada to the Lower 48, the Canadian Energy Research Institute says in a new study.

Factoring in Alaska gas assumes that TransCanada’s pipeline to Eastern Canada (with 1 billion cubic feet per day of capacity) and the Northern Border system to Chicago (with 2.5 bcf per day capacity) would absorb some of the Alaska volumes.

The joint industry-government agency said pipelines from Alberta and British Columbia have average export capacity of 14.9 bcf per day, but carry only 11.8 bcf, leaving unused space of 3.1 bcf.

Even if TransCanada gets regulatory approval to switch parts of its Canadian gas mainline for its proposed Keystone oil sands pipeline that would shrink the surplus by only 500 million cubic feet per day.

The institute estimates Western Canada’s gas supply will peak at 17.1 bcf per day of throughput in 2007, decline slightly by 2011, recover to 17 bcf in 2012 assuming gas starts to flow from the Mackenzie Delta, then embark on a slide to 13.5 bcf by 2024.

Under the study’s base case scenario, gas available for export to the U.S. will drop by 40 percent over the next four years, 60 percent by 2015 and zero percent by 2020.

Most optimistic has Alberta wells peaking in 2016

The institute’s own low case points to the well count starting its decline this year and slumping to 4,000 by 2024, although its growth case estimates 15,000 wells until 2021, then a decline.

For British Columbia, the study’s most upbeat forecast has well connections edging above 1,400 per year by 2015 then leveling off at the current rate of 1,200, but a bleak scenario points to a decline starting this year and hitting 400 wells in 2025.

Using TransCanada’s throughput study, the institute offers a “high” case for marketable coalbed methane production of 250 million cubic feet per day in 2005, rising to 2.5 bcf by 2009 and peaking at 2.75 bcf in 2025; a base case projects output of 1.2 bcf by 2010 and 1.9 bcf by 2025; while a pessimistic scenario has volumes topping out at 1.2 bcf by 2010 then shrinking to 750 million by 2025.

Other forecasts include:

• A Kitimat, British Columbia, liquefied natural gas terminal coming on stream in 2009 at 620 million cubic feet per day, although the institute’s forecast load factor of 85 percent lowers that to 550 million.

• A Mackenzie Gas Project starting in 2012 or 2013 at 800 million cubic feet per day in its first year, building to 1.2 bcf.

• A 48-inch line from Alaska (based on the institute’s own estimates) delivering 3.1 bcf per day in its proposed start-up year of 2016 and 4.7 bcf in its third year, resulting in 4.5 bcf arriving in Alberta.