Short term decrease seen for Canadian natural gas deliverability



    CALGARY, Oct. 10 /CNW/ - Deliverability of Canadian conventional natural
gas will decline by seven to 15 per cent during 2007-2009, says a National
Energy Board (NEB) report released today.
    The report, Short-term Canadian Natural Gas Deliverability 2007-2009,
says gas deliverability will decrease from 483 million cubic metres per day
(m(3)/d) or 17.1 billion cubic feet per day (Bcf/d) at the end of 2006, to a
lower range between 410 and 449 million m(3)/d in 2009 (14.5 to 15.8 Bcf/d).
    "The drilling pace that sustained Canadian natural gas deliverability is
gone, for the moment," said National Energy Board Chair Gaétan Caron.
    Most of Canada's natural gas resource lies in the Western Canada
Sedimentary Basin (WCSB). In recent years, the average production from new
wells in the WCSB has decreased gradually as the basin matures. High levels of
new drilling and exploration activity driven by high demand and prices for
natural gas helped maintain the overall production levels of natural gas,
despite rising costs for drilling and exploration.
    In mid-2006, drilling slowed down in the WCSB for several reasons:
continued high costs including labour, the increasing Canadian dollar value
affecting profit margins on U.S. exports, and stable, moderate natural gas
prices reducing the return on investment. Another contributing factor is
investment in oil and oil sands development, which competes for investment
capital with natural gas drilling.
    With less drilling, natural gas production is starting to decrease. The
flow of conventional natural gas from the maturing WCSB is expected to
decrease from an annual average of 458 million m(3)/d (16.2 Bcf/d) for 2006 to
389 million m(3)/d (13.7 Bcf/d) in 2009.
    Ongoing drilling is increasingly focused on the deeper western side of
the WCSB. This area requires more complex drilling that is more expensive,
but, the potential for larger returns is high. Producers will continue to
develop and improve their techniques to unlock the more challenging gas
resources.
    "We see cause for optimism as deeper drilling and improved techniques
help producers deliver tighter gas from deeper wells," added Caron. "In the
longer term, Canadians should rest assured that their natural gas needs will
be met as other sources, such as unconventional gas, liquefied natural gas, or
gas from frontier areas, enter Canada's energy market."
    Coalbed methane (CBM) is another positive story. The 2007 NEB report
projects continued growth in CBM, though more moderately than 2003-2006, to
approximately 23 million m(3)/d (0.81 Bcf/d) by 2009 in the NEB reference case
projection, up from 14.5 million m(3)/d in 2006.
    Canada is the world's third largest producer of natural gas, after Russia
and the U.S. Natural gas exports from Canada were valued at $27 billion in
2006.

    The NEB is an independent federal agency that regulates several parts of
Canada's energy industry. Its purpose is to promote safety and security,
environmental protection, and efficient energy infrastructure and markets in
the Canadian public interest, within the mandate set by Parliament in the
regulation of pipelines, energy development and trade. As part of its mandate
the NEB monitors the supply of all energy commodities in Canada and publishes
reports on energy, called Energy Market Assessments.

    This news release and the Energy Market Assessment Short-term Canadian
Natural Gas Deliverability 2007-2009 are available on the Board's Internet
site at www.neb-one.gc.ca under What's New!




For further information:

For further information: Kristen Higgins (khiggins@neb-one.gc.ca),
Communications Officer, Telephone: (403) 299-3371, TTY (teletype):
1-800-632-1663; For a copy of Short-term Canadian Natural Gas Deliverability
2007-2009: National Energy Board Publications Office, Telephone: (403)
299-3562, Email: publications@neb-one.gc.ca


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