Canada to spend billions on energy industry in 2000

Canada�s energy industry will spend $19.1 billion (Can.) on new plants and equipment this year, says the Canadian federal statistical agency. Statistics Canada says rising prices and energy exports are fuelling spending plans, with a significant portion of expenditures earmarked for Alberta and the Arctic.


CALGARY�Canada�s energy industry will spend $19.1 billion (Can.) on new plants and equipment this year, says the Canadian federal statistical agency. Statistics Canada says rising prices and energy exports are fuelling spending plans, with a significant portion of expenditures earmarked for Alberta and the Arctic.

The agency said overall energy exports�including oil, natural gas, and electricity�are up 44.3% on a year-to-year basis and up 10.2% in May vs. the previous month. Most exports are to the US.

A rise of 30% in crude oil prices this year and about 70% in natural gas prices are factors in increased exports and spending projections. Hot weather in California increased Canadian electricity exports in May by 61.5% to power air conditioners.

The agency said a survey of spending plans indicates the industry will spend significantly more on both conventional and nonconventional energy extraction. The agency noted strong drilling activity in Western Canada.

More than 7,300 wells were completed in the first 6 months of this year, and current rig utilization is about 56%, compared to 38% at the same time a year ago. The Canadian Association of Oilwell Drilling Contractors is forecasting more than 16,500 well completions this year, compared with only 10,605 last year.

Skilled manpower shortages in the service industry and access to capital are limiting factors in activity.

Arctic activity
Investment spending plans are centered on the Canadian north, where there are substantial undeveloped natural gas reserves, and in Alberta. Capital spending is forecast to rise 14.6% this year in the Northwest Territories and 8.4% in Alberta.

A number of proposals are being studied for reserve development and natural gas pipeline construction in the Northwest Territories and Alaska.

A producer group with gas reserves in the Mackenzie Delta, led by Imperial Oil Ltd., Toronto, is now completing a feasibility study for an 800 MMcfd pipeline from the region to markets in southern Canada and the US. Reserves in the area are estimated at 12 tcf of gas and 1.7 billion bbl of oil.

In Alaska, a consortium of Phillips Alaska Inc., BP, Foothills Pipeline Co., and Marubeni Corp. have completed a feasibility study on a gas pipeline project. Estimates of North Slope gas reserves are as high as 35 tcf.

Stephen Kakfwi, premier of the Northwest Territories, favors development and recently asked Ottawa for $230 million (Can.) in funding, to be used for resource development and pipeline construction in the region.

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