US - Draining Canada Dry

There are 15,000 natural gas wells in Canada and natural gas extraction volumes have slipped from the peak set in 2002, and output per well is now declining at an annual rate of 28%. On this basis there are only eight years of proven reserves left in Canada.

This is what David Hughes, a petroleum geologist with the Geological Survey of Canada told the World Peak Oil Conference held in Boston 2 weeks ago...."Natural Gas in North America: Should We be Worried?" His answer is empatically ...YES.

He says energy companies must add 3,000 more wells in Canada in 2007 just to keep output from declining.

Due to the North American Free Trade Agreement (NAFTA),Canada effectively gave up sovereignty over its fossil energy inheritance. As a signatory, Canada is prohibited from cutting back energy exports, even in the event of a domestic supply crunch.

Canadian natural gas is also critical for producing the pressurized steam needed to separate bitumen, a low-grade oil, from the tar sands of northern Alberta, the only oil-producing region left in North America that can increase output. Shrinking natural gas supplies would quickly reduce the low of bitumen into the U.S., further complicating Canada’s energy dilemma.

Hughes, quoted an un-named Canadian energy executive. “Using natural gas to produce oil from tar sands is akin to turning gold into lead,” to highlight the irony of sacrificing a premium energy source to make more low-grade fuel for export. He also quotes Dow Canada CEO on gas use for electricity/oil sands:"Utilizing Gas for low value uses like electricity generation and oil
sands as opposed to high value uses such as petrochemicals is like lighting candles with one hundred dollar bills".

About 25% of the crude oil and 80% of the natural gas imported into the United States comes south from Canada.

It is interesting to note the Short-Term Energy Outlook (and there is a message in that title) from the US Energy Information Administration says that Liquid Natural Gas, the principal competitor to Canada's piped natural gas will show ...." 2006 imports below 2005 levels because of price competition with Europe. The growing availability of supplies from liquefaction facilities in Trinidad and Tobago and Nigeria contribute to the expected increase in LNG imports in 2007. However, U.S. LNG imports will continue to be affected by price competition from other LNG-consuming economies, particularly in Europe. "

Sobering figures for the so called planners in the UK Department of Trade and Industry to consider as the UK accelerates towards an energy economy based on 80% of 2020 electricity production on imported gas.

Hughes, David: "North American Natural Gas Production Trend and Implications for Canadian Tar Sands Production,” 2006 Boston World Oil Conference, Boston University, October 2006.

See also Matt Simmons - Slide 34 "Risk of Peak Gas is worse than Peak Oil"

It is invidious to just quote these 2 papers from the conference. Read them all, the problems highlighted will affect the globe before climate change does.