Monday, March 21, 2005

CERI: More Gas Out There

Canadian gas production is far from peaking, according to the Canadian Energy Research Institute. Vello Kuuskraa, president of the Advanced Resources International Inc. (ARII), said that in the short term the U.S. has no choice but to accellerate construction of an Alaskan gas pipeline, and step up LNG imports. But that's not to say that there isn't more gas out there:
Kuuskraa said the US is not running out of natural gas, only shallow and easy-to-find-and-produce gas. The speaker said there are massive volumes of gas that still remain locked in domestic reservoirs, primarily tight gas sands, gas shales, and coalbed methane basins. In addition, he said, deep gas resources, onshore and offshore, remain undeveloped.

Kuuskraa said 8 of the top 12 gas fields in the US are now unconventional fields. He said more-advanced knowledge and improved technology are increasing recovery rates from unconventional gas reserves. Intensive drilling for coalbed methane (CBM) projects produce much higher recovery rates than traditional well spacing.

"Rumors of a terminal decline in gas production have been greatly exaggerated," the speaker concluded.

But, despite this optimism, the report noted that "a trend of increasing F&D costs, that, if unchecked, threatens to choke off reinvestment and production replacement in the [Western Canada Sedimentary Basin]". Could it be that EROEI is going negative in that area?