Wins, losses in Canada for U.S. units

Gary Park

Petroleum News Calgary Correspondent

Canadian subsidiaries of U.S. E&P companies logged a mixed bag of small production gains and losses in the first quarter over a year earlier, but most seemed committed to active programs over the rest of 2004.

Here is a summary of those reporting results:

Canadian production continued on a downward trend for ConocoPhillips, pending completion of the company’s C$1.4 billion Surmont oil sands project, in which the company has a 43.5 percent stake, with Total holding 43.5 percent and Devon Canada 13 percent.

For now, ConocoPhillips oil output, including its 9.03 percent stake in the Syncrude Canada oil sands consortium, averaged 27,000 barrels per day compared with 33,000 bpd a year earlier, while natural gas liquids dipped to 10,000 bpd from 11,000 bpd.

Natural gas volumes decreased to 428 million cubic feet per day from 436 million.

ConocoPhillips capital spending on exploration and production in Canada is set at $400 million, primarily for Syncrude, the Surmont development and Mackenzie Delta gas development.

Plans for Surmont call for 27,000 bpd in 2006, growing to 100,000 bpd by about 2014, with an operating life of 40 years to tap a resource of 5 to 10 billion barrels.

Shrugging off the impact of Canada’s stronger currency and rising service costs, Burlington Resources may step up gas exploration in Canada this year, taking advantage of its $1.03 billion in available cash.

Chief Financial Officer Steve Shapiro said a Canadian acquisition could be an option along with the company’s plan to invest $2.3 billion on exploration and development in Canada over the next three years.

However, he said Burlington does not yet have a fix on how much it might step up activities beyond saying the plan is “part of the normal course of what we’re doing.”

Operations north of the 49th parallel yielded 846 million cubic feet of gas per day and 5,800 bpd of oil, compared with 852 million and 5,100 bpd a year earlier.

Average Canadian prices dropped to $5.53 per thousand cubic feet for gas from $5.72 and to $32.78 a barrel for crude from $35.68.

Natural gas liquids output declined to 26,100 bpd from 28,000 bpd.

Anadarko Petroleum’s Canadian natural gas production edged up to 395 million cubic feet per day from 389 million, but crude oil and condensate volumes slipped to 15,000 bpd from 17,000 bpd.

The company blamed the drop partly on extreme cold during January that forced a shutdown of two non-operated plants.

In its operations summary, Anadarko said a 100 percent working interest well drilled in the lower Northwest Territories over the winter tested at 9.9 million cubic feet per day. The company also re-entered two exploration wells in the Fort Liard area that were started in the 2002-03 winter.

Anadarko also said it participated with a 37.5 percent working interest in EnCana’s Umiak N-16 exploratory well on the Mackenzie Delta. Results of that well will be released when EnCana decides, the company said.

Apache completed 224 out of 274 wells in the first three months, posting an 82 percent success rate, while edging up production volumes to 314.06 million cubic feet per day of gas from 309.21 million and 25,266 bpd of oil from 24.735 bpd.

Gas prices dropped to $5.09 per thousand cubic feet from $5.35, but oil rose to $33 per barrel from $32.09.

Coalbed methane drilling produced strong gains, with 16 first-quarter wells pushing Apache’s coalbed methane well count to 121 and adding 16 million cubic feet per day to volumes. The company expects to complete 250 coalbed methane wells this year.

At Zama in northwestern Alberta, 68 wells were drilled in the quarter adding 11 million cubic feet per day of gas and 1,640 bpd of oil.

Canada is one of the growth areas for Houston-based EOG Resources, with production surging to 222 million cubic feet equivalent per day from 174 million a year earlier, including a rise in natural gas output to 203 million cubic feet per day from 158 million.

The outlook for the current quarter is even better, said Chairman and Chief Executive Officer Mark Papa, noting that volumes growth stems from the tie in of shallow wells drilled during the winter.

EOG expects to complete about 1,300 shallow wells, 80 to 100 of them targeting coalbed methane, in its central/southern Alberta plays in 2004.

Papa estimated that the coalbed methane wells in the Horsehoe Canyon area will yield somewhere between 300 million and 500 million cubic feet per well.