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More US gas destined for Canada
The flow of natural gas across the United States-Canada border could be headed for a directional shift within 10 years, with Canada taking advantage of “abundant and cheap” supplies from the Marcellus region.
That prediction by Peter Howard, chief executive officer of the Canadian Energy Research Institute, will depend on whether Marcellus output meets an expected increase to 18 billion cubic feet per day by 2021 from the current 4 bcf per day, he told a petrochemical conference in Alberta earlier in June.
All the signs point in that direction, with another 2,000 wells in the U.S. shale region due to come into production in 2014-15, posing a challenge for producers to find markets, he said.
That could also translate into stiff competition for Western Canadian producers, who face production costs of US$3.80 per million British thermal units, compared with US$2.30 in the Marcellus, Howard said.
Strengthening the prospect of gas being shipped into Canada from the U.S. is the likelihood of a pullback in drilling the Duvernay formation in Alberta if forecast demand for Western Canada gas to support LNG export projects falls short of expectations, he said.
Applications to drill down Howard noted that applications to drill new gas wells in Alberta are likely to drop below 1,000, compared with 1,100 in 2012.
“It is almost guaranteed that Marcellus and Utica production will overtake Western Canada, reversing the flow of gas across the 49th parallel, said Rusty Braziel, president of RBN Energy, an energy information company.
He is counting on 1 bcf per day flowing into Eastern Canada from the U.S. Northeast by 2017, while 9 bcf per day of dry gas is added to U.S. volumes, possibly cutting in half Canadian exports to the U.S.
Gerry Goobie, a principal with Gas Processing Management, said some Eastern Canadian users are already importing small volumes on an existing TransCanada pipeline, fueling debate over how much those levels will rise.
Howard also noted that decommissioning coal-fired power plants in Canada will open the way to imports.
David Collyer, president of the Canadian Association of Petroleum Producers, has been making his case in recent months that the emergence of shale gas “has been a game-changer for the North American market.”
“It will be a major contributor to North American self-sufficiency over the next 15 to 20 years, bringing with it significant economic and geopolitical implications,” he said, referring to the environmental and social impacts of exploration and production.
—Gary Park
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