Alaskan gas key to meeting US demand
Alaskan gas will be an essential element in meeting future US demand, industry executives told a Ziff Energy conference in Calgary this week. One executive said US gas demand is forecast to grow at 1.5-2% a year, but he does not foresee a supply shortage because Alaskan gas will be part of the supply picture by 2010.
CALGARY�Alaskan gas will be an essential element in meeting future US demand, industry executives told a Ziff Energy conference in Calgary this week.
Tim Holt, president and CEO of BP Canada, said US gas demand is forecast to grow at 1.5-2% a year, but he does not foresee a supply shortage because Alaskan gas will be part of the supply picture by 2010.
Holt said BP is looking at a number of pipeline options to move Alaska gas. He said an optimistic timeline would be a regulatory filing in the second half of 2001 followed by a 6-7 year regulatory and construction process. The best estimate for gas flow from Prudhoe would be 2006-2007, he said, adding gas-to-liquids and liquefied natural gas technologies are still being researched to move Alaska gas�but neither is commercially viable at this point and will require a technology breakthrough.
Holt said improved technology such as high-pressure steel with less compressor requirement, improved coating and maintenance techniques, and automatic welding will help reduce pipeline costs on any project.
He said BP is trying to avoid polarization of groups in selecting a pipeline route and the company has not decided on any of three possible routes. He said a successful project will depend on all interested parties working together.
Bob Boswell, chairman and CEO of Forest Oil Corp., said the Arctic will be the most likely source of incremental gas supplies if the Gulf of Mexico cannot meet production targets.
Boswell said expected production from the gulf is 4.5 tcf/year in 10 years; current production is 0.8 tcf. The target production will require growth of 21% compound annual growth. This would require two to three times the current rig fleet, he said, and an increase in completions to 300/year from the current 100/year.
Boswell said gas supply from the Arctic region could affect prices in other production basins, but not dramatically, and the northern gas will be needed to meet shortfalls elsewhere.
Jim Simpson, president and CEO of Chevron Canada Ltd., said the industry faces monumental challenges and huge investments in getting to a target of 4 million b/d of oil and associated gas from the gulf offshore by 2015. He said many factors would have to come together to get sufficient offshore production, particularly in the deepwater areas.
Simpson said the deepwater is a high-risk, high-cost strategic investment area for big players. He noted success in the deepwater is more reliant on oil prices than gas prices.
He said other factors critical to success include development and application of technologies; application of existing technology that is being used overseas; a strong safety and environment record; a continued focus on cycle time for projects; reasonable regulatory and permitting requirements; access to prospective acreage; and availability of well-trained workforces.
On the positive side, he said, the big companies with the capital to take risks are well-positioned in the deepwater; the lead time from discovery to production has dropped to 4 years from 10 years; and improved seismic and drilling techniques have cut the risk ratio on projects from 1 in 6 for the first 15 years offshore to 1 in 2.4 since 1996.