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Record drilling not enough to stop decline in gas reserves Canadian Association of Petroleum Producers reports supplies fell in 2000 for fifth straight year; crude oil and equivalent gains 400 million barrels Gary Park PNA Canadian Correspondent
Canada’s record-breaking exploration efforts to build its natural gas supplies are going backwards, with reserves falling in 2000 for the fifth straight year.
In its 50th annual reserves report, the Canadian Association of Petroleum Producers reported that despite the unprecedented completion of 8,929 gas wells in 2000, reserves across Canada slipped by 2.1 percent from 1999 to exit the year at 59.7 trillion cubic feet, down 12 trillion cubic feet since 1990.
In the Western Canada Sedimentary Basin, there was a similar decline to 56.9 trillion cubic feet, but the East Coast offshore showed a net gain of 300 billion cubic feet to 2.7 trillion cubic feet.
Crude oil and equivalent reserves grew by almost 400 million barrels in 2000 to 12.3 billion barrels, largely due to discoveries in Saskatchewan, where reserves increased by 7.7 percent to 1.15 billion barrels.
Booked reserves at oil sands projects were basically unchanged at 5 billion barrels, although the Alberta Energy and Utilities Board estimates the province has 315 billion barrels of ultimately recoverable reserves.
Industry invested almost C$23 billion CAPP said the industry invested almost C$23 billion in capital programs during 2000, up C$6 billion from 1999, making the oil and gas sector the largest private-sector investor in Canada for the year.
But, faced with forecasts of a possible 20 percent decline in spending in 2002, CAPP fiscal policy chairman John Richels said the industry “has to reinvest just to sustain the current production levels.”
The major immediate concern is the erosion of gas reserves at a time when Canada is being counted on to provide 70 percent of North America’s incremental growth demand over the next eight years.
Greg Stringham, CAPP vice-president of markets and policy, said member companies are agreed the focus must shift to gas, with greater emphasis on exploratory drilling instead of development work.
Drilling likely to shift to deeper plays The decline rates of wells drilled in well-defined areas, combined with positive results from areas such as British Columbia’s :Ladyfern region, are likely to see drilling shift to deeper plays in Alberta and British Columbia and northward to the Yukon and Northwest Territories, CAPP said.
According to CAPP, the industry replaced only 79 percent of production from the Western Canada Sedimentary Basin in 2000 compared with 83 percent in 1999.
In Alberta, 65 percent of gas production in 2000 was replaced, leaving reserves at 44.8 trillion cubic feet and 150 percent of British Columbia’s production was replaced, building reserves to 8.9 trillion cubic feet although the Ladyfern discoveries have yet to be calculated.
The report attributed Alberta’s results largely to a continued shallow-gas drilling trend in southeastern Alberta, which accounted for 50 percent of all gas wells in the province.
More than 10,000 gas wells this year CAPP said gas drilling in all of Canada should surpass 10,000 wells this year — based on a total 9,102 gas completions to the end of October — before declining in 2002 in response to weaker commodity prices and reduced cash flows. Other industry organizations and analysts are widely agreed in their 2002 forecasts that the number of gas wells will drop by as much as 25 percent next year.
Conventional light and heavy reserves in Western Canada rose to 3.5 billion barrels, replacing 104 percent of production, due largely to Saskatchewan’s heavy-oil dominated industry replacing 154 percent of production Alberta’s replacement rate of 74 percent left the province with 2.08 billion barrels, while British Columbia was unchanged at 174 million barrels.
CAPP said new drilling in the East Coast’s offshore Hibernia and Terra Nova fields added 136 million barrels after production and raised reserves to about 1 billion barrels. So far, there has been no attempt to estimate reserves for the White Rose, Hebron/Ben Nevis, which are due to come on stream in the next three or four years, or other fields in Newfoundland’s Grand Banks.
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