Canadian Energy Trade Groups See Slumping Gas Production, Slow But Continuing Tarsands Growth In 08

[hatrack]

CALGARY - Natural gas producers and drillers, whose field activity plummeted this year probably won't be seeing much relief in 2008, while action in the oilsands is expected to intensify thanks to record-high crude oil prices. The bottoming out of North American natural gas markets coupled with the soaring loonie made for an "unpleasant and difficult" year, said Don Herring, president of the Canadian Association of Oilwell Drilling Contractors, adding that in 2008 "the story continues to worsen."

Herring's group predicts a huge drop in drilling in 2008. The industry drilled 6,000 fewer wells this year than in did in 2006 and next year it expects to see that figure drop by about another 2,560 - a 38 per cent drop within two years. The Petroleum Services Association of Canada also released dismal predictions for 2008. That group forecasts drilling to go down by 17 per cent between 2007 and 2008.

Natural gas prices hit record highs in the fall of 2005, a particularly bad hurricane season for the U.S. Gulf Coast, which hosts a number of major gaswells and gathering pipelines. But since then, North America has experienced two warm winters and one tame hurricane season, leading to a big supply surplus. In addition, the expansion of liquefied natural gas projects has created a global market for LNG, which would freeze and liquefy gas produced in Russia, the Middle East and South America and ship it by tanker to North American markets, where it would be regassified and used to boost supplies to consumers, businesses and power plants.

The average price of natural gas in North America was about $6.50 per thousand cubic feet this year. "A large number of potential wells are uneconomic at that price. Really to make gas economic again in Canada, we need prices north of $8." said PSAC president Roger Soucy. "There's a lot of gas in North America right now as a result of some warm winters and we don't expect that we're going to come out of this heating season next March with a whole lot changed."

EDIT

http://www.brandonsun.com/story.php?story_id=83710

[Javaman]

1. And just were is the water going to come from for the tar sands...

oh yeah that little detail always gets overlooked.

ecological distaster unfolding before our eyes.

[amandabeech]

2. Those tarsand facilities use lots of natural gas.

Current ideas of powering the "mining" and refining with the tar sands themselves may not produce enough energy to continue production.