"Declines in Canadian natural gas production will set records this year as low prices keep the lid on drilling for new supplies and on connecting existing production, industry observers said.
Volumes from Western Canada, where the bulk of the country's natural gas is produced, will drop by one billion cubic feet per day on average this year, down from an earlier estimate of 750 million cubic feet per day, First- Energy Capital Corp. analyst Martin King predicted."
"Producers in Canada may have to think about looking beyond the shores of North America in terms of marketing their product," he said.
Natural gas markets have been slammed by a number of factors in the past year, including mild weather dampening demand from power generation for heating and cooling, low industrial demand due to a North American recession, and bloated storage facilities."
"Producers started slashing their drilling budgets last year in response to prices that were sliding from highs of $13 US, and have been shutting in supply rather than selling at a loss. Industry estimates it costs an average of about $7 per mmBTU to produce natural gas."
"U. S.-based Chevron Corp., the world's fifth-largest natural gas producer, said Friday it planned to idle all of its onshore gas drilling by the end of 2009 after prices for the heating and power-plant fuel collapsed. Chevron is redeploying rigs to search for crude, which generates better returns, the corporation said. Gas accounts for about 30 per cent of the corporation's production."
The rebound isn't imminent, the but production declines will eventually bring supply closer to demand.
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