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Frontiers, CBM key to natural gas supplies Untapped resources needed to sustain exports to United States Gary Park Petroleum News Calgary Correspondent
The United States can count on Canada to continue exporting natural gas at current levels or slightly higher until 2025 — if new frontier and unconventional sources are tapped, says a new report by the Canadian Energy Research Institute.
Canadian volumes could grow by one-third from current levels of 6 trillion cubic feet a year if well completions climbed to 15,000 a year from this year’s expected 11,000-plus, assuming additions from Northern Canada, the East and West Coast offshore regions and coalbed methane, the report said.
Production in the Western Canada Sedimentary Basin started to slip in 2000 and will likely shrink by one-third by the end of 2025, and Canada must “look to different regions and sources” for supply growth, said Paul Mortensen, Canadian Energy Research Institute research director and study co-author.
He said the institute sees Arctic gas as “the most economic” to bring into production at this time, although offshore gas from both coasts would be available for less than the C$4 per thousand cubic feet supply-cost level.
Coalbed methane also “looks like a nice fit to take the place of some of the declines we would see in shallow gas areas” because it is positioned to take advantage of existing infrastructure. Supply costs will rise The report estimates supply costs will rise from the C$2.50 per thousand cubic feet average in 2002 to C$4 (in 2001 Canadian dollars) by 2020.
Those increases means 2002 gas price levels would not be sustainable in the near future, the institute said.
The study said it is likely that 65 percent of Canada’s gas has yet to be produced, the bulk of it in Western Canada.
It estimates that 222 trillion cubic feet can be produced at current prices, strongly above both other calculations, although 25 percent of that total would come from coalbed methane which has yet to be commercially produced in Canada.
If gas costing C$10 per thousand cubic feet was not an obstacle, the institute said Canada’s reserves could soar to 483 tcf, including 130 tcf in Western Canada and 215 tcf of coalbed methane.
Current coalbed methane reserves of 70 tcf are based on production costs of C$4 per thousand cubic feet.
Mortensen said Canadian gas could remain competitive against liquefied natural gas, which would land in the United States at a cost of US$3.50 per thousand cubic feet.
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