Four Wells Come Off The Confidential List Today -- August 23, 2019

Wells coming off confidential list today -- Friday, August 23, 2019: 64 for the month; 111 for the quarter:

• 35978, SI/NC, Newfield, Sturgeon 150-99-18-19-2H, South Tobacco Garden, no production data,
• 35601, SI/NC, XTO, Cole 44X-32F, Siverston,
• 35042, drl, Hess, BB-Charlie Loomer-150-95-0718H-9, Blue Buttes,
• 32951, 79 (no typo), BR, State Dodge 2B MBH, Dimmick Lake, t5/19; cum 8K over 8 days;

Active rigs:

$54.03	8/23/2019	08/23/2018	08/23/2017	08/23/2016	08/23/2015
Active Rigs	64	62	53	31	76

RBN Energy: the push for more gas pipeline capacity from western Canada, part 4.

The rise in unconventional natural gas supplies in Western Canada has forced the region to again confront a dilemma that it faced in the 1990s and early 2000s: not enough export pipeline capacity to move all that gas to market. Although demand for natural gas has been growing in Alberta’s oil sands and power generation markets, it has not kept pace with provincial gas supply growth, leading to oversupply conditions and historically low gas prices. The need to export more of the gas to other parts of Canada and the U.S. is driving some pipeline expansions in the region. The question is, will they be enough? Today, we provide an update on the utilization of existing export routes, as well as the prospects (or lack thereof) for takeaway expansions, starting with Westcoast Energy Pipeline.

This is Part 4 of our series analyzing the Western Canadian gas market. Earlier, we discussed the most obvious signs of a gas market facing change and challenges: weakening gas prices at AECO — the national benchmark hub — both on an absolute basis and relative to U.S. benchmark Henry Hub. Specifically, growing gas supplies and pipeline constraints have created one of the weakest gas price environments in Western Canada in 20 years.

Later we explained why gas supplies in Western Canada have been rising, despite the weak gas pricing environment of the past few years: lower production costs in unconventional gas plays such as the Montney formation, and the growing share of production coming from plays where gas is more of a by-product of drilling for more economically attractive resources, namely NGLs.

Then we considered some of the local demand outlets for all of that gas supply growth and concluded that rising gas demand in Alberta — from gas use in oil-sands production and power generation — has the potential to absorb some, but not all, of the growing gas supplies in Western Canada. That leaves gas deliveries to more distant markets as the only other option for any incremental supply that can’t be consumed locally. The trouble is that, as we’ve discussed in previous blogs on the topic, Western Canadian gas producers face a combination of takeaway-capacity constraints and pushback from competing U.S. gas supplies.

Today, we take a closer look at how tight that takeaway capacity has been of late and any upcoming expansions that could provide some relief.