Canadian board: Drillers must set record pace to meet gas demand

Exploration companies will have to set a record drilling pace for natural gas over the next 3 years to meet strong demand and counteract declining well output, says Canada�s National Energy Board. It said industry would need to drill 25,000 new gas wells over the period to meet demand for the commodity.


CALGARY�Exploration companies will have to set a record drilling pace for natural gas over the next 3 years to meet strong demand and counteract declining well output, says Canada�s National Energy Board. It said industry would need to drill 25,000 new gas wells over the period to meet demand for the commodity.

The board said well productivity is declining and new wells can lose up to 40% of daily production within 1 year. The average decline for wells is about 20%. The NEB estimated annual decline in production is close to 3 bcfd. It also expects future wells will be generally less productive than those drilled a few years ago.

NEB officials said an increased drilling effort would be needed to offset declines from existing wells to maintain or increase overall deliverability from the Western Canada Sedimentary basin.

The Canadian industry now exports more than half of annual production to the US, and strong demand has sharply increased prices for producers.

The NEB projects 8,100 gas wells will be drilled this year; 8,700 in 2001; and 8,900 in 2002. That would increase western Canada production to 17.5 bcfd in 2002 from a current level of 16.4 bcfd.

Len Coad, vice-president North American Gas for the Canadian Energy Research Institute, said more than 7,000 gas wells were completed to the end of November.

He said production is expected to grow, but the total number of wells drilled may drop in the future as producers drill more wells in deep formations in northern Alberta, British Columbia, and the Northwest Territories.

Many western Canada producers are focusing their spending plans and drilling efforts on natural gas for 2001 because of strong demand and prices. Major producers such as Alberta Energy Co. Ltd., PanCanadian Petroleum Ltd., and Gulf Canada Resources Ltd. have all announced increased spending and gas drilling activity for 2001.

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