Jim Stott
Special Correspondent
CALGARY, Nov. 9 -- With North America at a turning point in energy, the US, Canada, and Mexico should work together towards a mutual and secure energy future, says the recently elected chairman of the Texas Railroad Commission (TRC).
Victor Carrillo told a Ziff Energy North American natural gas conference in Calgary that the countries could work together to resolve a serious gap in gas supply relative to growing demand.
He said this is a critical time for the energy industry in North America and elsewhere, with new variables such as terrorist attacks in the Middle East and the large and growing demand for energy in China.
The TRC chairman noted that Texas is still the leading US state in energy production with fairly stable gas production of 6 tcf/year. He noted it is also the leading crude oil producer, although there has been a steady decline from 3 million b/d in the 1970s to 1 million b/d now.
Carrillo said that although gas targets in Texas are shrinking, drilling activity is setting records, most of it targeted to gas.
Effect on markets
However, he noted that the increase in gas prices has hurt some consumption sectors, particularly the petrochemical and fertilizer industries.
Carrillo said market growth requires the development of both conventional and alternative sources of energy, including geothermal energy; clean, low, or no-emission coal; biomass; LNG; and arctic gas.
The TRC chairman said eight LNG projects are proposed in Texas, which has the infrastructure to support LNG development. This option should be pursued aggressively, both in Texas and elsewhere on the Gulf Coast, he said, urging that regulatory barriers to LNG development be eased.
Carrillo remains optimistic that the administration of newly reelected US President George W. Bush will be able to pass an energy bill in some form in 2005, particularly after Republican gains in Congress.
Alberta Energy Minister Murray Smith said there is no magic bullet to quickly resolve natural gas supply problems. But he said a philosophy of free markets and free trade in energy must continue in Canada and the US.
Pipelines, CBM
Alberta enthusiastically supports arctic pipeline and resource development, he said, including the Mackenzie Valley gas pipeline to bring gas from the Canadian Arctic and the Alaska Highway pipeline to move gas from Alaska's North Slope.
Smith noted, however, that early approval of the Alaska line would require Canada to accelerate development of the line from the Mackenzie Delta. Smith said his province would like to see both arctic lines tied into an Alberta pipeline hub with continental connections.
Drilling activity in western Canada is booming, Smith said, citing forecasts for more than 24,000 well completions in 2005, more than 70% targeting gas.
The Alberta minister said drilling for coalbed methane (CBM) also is becoming significant in Alberta, with an expected 2,500 wells and recompletions aimed at CBM by yearend.
He said water is not an issue because formations currently explored involve dry coal. A pipeline infrastructure is in place for CBM, and the wells are relatively inexpensive to drill and connect, he noted. Estimates of CBM in place range from 100 tcf to 500 tcf, Smith said.
Brendan Bell, minister of resources and economic development for the Northwest Territories, said his region would reap substantial economic benefits from development of the Mackenzie pipeline and from increasing integration of North American energy markets. He estimated long-term benefits from the Mackenzie line could range from $20 billion (Canadian) to $59 billion across Canada.
The pipeline would open a new basin, he said, and spark additional exploration in arctic Canada. Bell said the recent regulatory filing by a producer group for the Mackenzie line was an important step.
The NWT minister said plans for an energy alliance between Canada's western provinces and its territories are under discussion. Bell said the NWT wants regulatory control over its lands and water, now controlled by Ottawa, and access to resource revenues to help pay for development costs.
Contact Jim Stott at [email protected].
