Wednesday, June 24, 2009

No Need for Arctic Gas; Alberta in Trouble?

Several posted articles postulated that shale gas may wipe out the need for gas from Alaska's North Slope, or from Canada's frigid Mackenzie Valley; a post from confirms the same:

Abundant cheap supplies of natural gas from new shale deposits, plus growing imports of liquefied natural gas flowing into the United States, push back by 15 years the need for Arctic gas and make it difficult for higher-cost gas from Western Canada to compete, says pipeline executive Steve Letwin.

The North American natural gas industry is "overbuilt," pointing to weak prices for a long time, said Mr. Letwin, Houston-based executive vice-president, gas transportation and international, at Canadian pipeline giant Enbridge Inc.

Years of worry about supply shortages because of the maturing of conventional supplies have been replaced by worries there aren't enough customers for the 1,200 trillion cubic feet of natural gas in shale deposits -- enough to last a century -- found in the past three years, plus liquefied natural gas coming from offshore that is "needed like a hole in the head," Mr. Letwin said in an interview.

"The biggest issue that we now have is [insufficient] demand," said Mr. Letwin. "And in the absence of demand, you are going to see a price for gas that is going to be kept between US$5 and US$7 for a long time to come."


Shale producers in the United States can make money at low prices, he said. But the trend is not promising for natural gas stranded in the Arctic, which has
been waiting for decades for pipelines to be built so it can be commercialized.

Another post speculates that America's shale gas resources may hurt Alberta's
, of which has been a producer of gas exported to the US:

Major shale gas discoveries in the southern United States are threatening the financial lifeblood of Alberta: the royalties the province collects from natural gas, Premier Ed Stelmach says.


Energy companies aren't drilling in Alberta because of the new finds and a ``very, very depressed gas market right across North America,'' the premier explained.

He said the major new finds, including some estimated at a trillion cubic feet in Louisiana and Texas, are much closer to the market than Alberta ``and these are serious consequences for the revenue side in government.''

Stelmach couldn't say how much of an impact there will be on provincial revenues in terms of a dollar amount, but said ``royalties are at least a good third of our revenue stream.''

- Brewskie

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