For the fifth year in a row, Nova Corp., Calgary, transported record volumes of Canadian natural gas in 1991.
The company expects total deliveries to continue at record levels in 1992.
Because of customer requests for transportation capacity, Nova estimates its spending for capacity expansions will amount to $500-606 million (Canadian)/year through 1995. Capital spending in 1992 is estimated at $650 million.
Meantime, Nova said it will require advance payments totaling $190 million by May 1 to pay for expansions to accommodate deliveries to two gas pipeline projects for further shipment to the U.S. West Coast.
Increased deliveries are on the drawing board to Pacific Gas Transmission Co. (PGT), San Francisco (OGJ, Jan. 13, p. 19), and new deliveries are proposed to Altamont Gas Transmission Co., which plans a system from the Canadian border for sales to the Kern River system at Opal, Wyo. PGT and Altamont recently made initial payments totaling $65 million.
RECORD SHIPMENTS
Nova's total receipts of 3.04 tcf were up 5% in 1991 from receipts of 2.9 tcf in 1990.
Average receipts were 8.3 bcfd, compared with 7.9 bcfd in 1990.
NOVA's Alberta pipeline is the main transportation system for collection of gas for use in the province and delivery to border points for shipment outside Alberta.
Total deliveries for use in Alberta were about flat at 576 bcf, compared with 581 bcf in 1990.
For shipments out of Alberta, deliveries were 2.45 tcf, up 7% from 2.29 tcf in 1990.
At the Alberta-British Columbia border, shipments were down 3% at 516 bcf. At the Alberta-Saskatchewan border, deliveries destined for Central Canada and U.S. markets via TransCanada PipeLines Ltd.'s system were up 9% at 1.5 tcf. Shipments destined for the U.S. Midwest via the Foothills pipeline system were up 13% at 383 bcf.
ADVANCE PAYMENTS
Advance payments from shippers are part of $800 million Nova estimates it will cost to expand its Alberta system for deliveries to PGT and Altamont at border export points. Nova placed advance orders for pipe and equipment to meet completion deadlines of November 1993 for both projects.
Canadian industry observers expect only one of the two projects to go ahead.
The Alberta Energy Resources Conservation Board is examining submissions by PGT and Altamont. The board will not recommend which project should be approved but will rule on proposed additions to the Nova system.
Alberta currently sells California about $1 billion/year of gas.
Nova plans to go to equity markets for the second time in 6 months to raise $240 million. The company raised $196 million net from a share issue last July.
The new share issue will raise funds to finance pipeline capacity expansion and improve the company's capital structure. Nova last month sold its 43% interest in Husky Oil Ltd., Calgary, for $325 million.
SUPPLIES TIGHT
Nova said an industry survey reveals a growing supply problem in meeting demand for Alberta gas.
The company said, on average, Alberta gas fields can deliver only 87% of demand that current contracts in force would allow during peak demand periods. It said there is a shortfall of 2.5 bcfd, the difference between real supply capacity of about 10.1 bcfd and a theoretical connected capacity of 12.6 Bcfd.
The company attributed about 40% of the shortfall to slow methods in current procedures for increasing production and 60% to a slump in field activity needed to replace reserves because of low gas prices. Nova pipeline division Pres. Bruce Simpson said the industry is unlikely to do much drilling and development work at current wellhead prices.
Natural gas drilling in Western Canada declined 22% in 1991 to less than 1,800 wells.
Consultants Noel Cleland of Sproule & Associates Ltd. and Fred Coles of Coles Gilbert Associates Ltd. estimated Alberta has a 17-18 year supply of gas reserves. That compares with a 25 year reserve life to meet all contracts in the mid-1980s.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
