The general consensus among most of the industry is that commodity prices will remain high for the next several years. High prices continue to drive high levels of industry activity in the Western Canadian Sedimentary Basin (WCSB). Although gas well drilling is similar to last year in the first three months of the 04/05 gas year, gas well connections have increased 22 per cent, mostly in southern Alberta.

Contributing to this increase is higher Coal Bed Methane (CBM) activity. CBM licenses have increased by 167 per cent in the first four months of the 04/05 gas year compared to the same period in 03/04. However, this has been offset by a similar decrease in conventional gas well licenses. Although the Horseshoe Canyon formation continues to be the favourite CBM target, inroads are being made in the Mannville zone, mostly in the NW quadrant of Alberta.

In general, the increasing decline rates and decreasing initial well production rates (IP) make it difficult to grow production from the WCSB. The majority of the activity continues to be in the east half of the WCSB, where IP's are the lowest. Although IP's continue to decline slightly, the increase in gas well connections has allowed for supply growth of about 1.2 per cent so far this year.

Overall, WCSB production is forecast to grow by 100 - 200 MMcf/d in 04/05. This summer, throughput on the Alberta System is forecast to be in the 10.9 - 11.2 Bcf/d range compared to 11.0 Bcf/d last summer. This growth in supply combined with less storage injections will allow for an increase in exports from the WCSB this summer compared to last summer in spite of growing intra-WCSB demand.

For more information, please refer to our presentation on our Customer Express website, or contact Craig Yano at 920.2255, or Al Jamal at 920.2265.