Alberta seeking natgas investments in effort to diversify
Calgary (Platts)--13Dec2012/615 pm EST/2315 GMT
The Alberta government is aiming to attract major investment in its
natural gas sector in 2013, as part of the Canadian province's strategy to
develop a balanced and diversified energy portfolio, a provincial government
official said Thursday.
Low gas prices in recent years have acted as a deterrent and resulted in
producers shutting-in wells and reducing output. But, with prices projected
to increase next year, the scenario could change, Justin Riemer, assistant
deputy minister at the province's Department of Enterprise, said in a
telephone interview from Edmonton.
The department facilitates energy investment in Alberta and also acts as
the province's prime economic development agency.
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"The Petroleum Services Association of Canada has recently forecast a 3%
increase in natural gas utilization in 2013, compared with the current year,
assuming an AECO price of $3.25/MMBtu," he said, adding that an increase in
gas demand in the province could potentially drive prices up further, to
"The liquids content in the gas is attracting investments and we also
expect to see increased demand for natural gas from the oil sands sector,
particularly those projects that utilize [steam-assisted gravity drainage]
technology to extract bitumen," he said.
Alberta regulator Energy Resources Conservation Board has projected
natural gas utilization by the oil sands patch will total 1.13 Bcf/d in 2012,
compared with 950,000 Mcf/d last year, with an increase to 2.36 Bcf/d by 2021.
Bill Gwozd, a vice-president with Ziff Energy Resources, said November
15 at an industry conference in Calgary that gas consumption by Alberta's oil
sands producers could grow to even 7 Bcf/d by 2020, if oil prices hold steady
and all the planned projects move ahead.
"The planned export of LNG from British Columbia to new markets will
also result in driving up gas demand. The industry tells us that startup of
an LNG industry in the West Coast will be an important indicator of planned
new investments in the shale gas plays in both Alberta and British Columbia,"
LOOKING FOR WAYS TO ENCOURAGE MORE GAS USE
The provincial government is not planning any changes in its existing
royalty structure to provide tax credits for gas operators in Alberta, but
Riemer said his department is actively looking at ways to encourage more gas
consumption for downstream processing.
"We already have a gas-based downstream industry in the province and are
now working on providing further value to the bitumen chain. We are working
hard with prospective investors to help them with the challenges they face
related to availability of feedstock gas, rising capital costs of projects
and a growing shortage of labor," he said.
Commenting on a recent announcement by Sasol that it would postpone by
at least a year, to end-2013, a final investment decision on its
gas-to-liquids facility in Alberta, Riemer said the provincial government is
hopeful there will be a positive outcome.
"We are continuing to work them and see the announcement as a
postponement, rather than anything else," he said.
Sasol's 96,000 b/d GTL plant -- to be built in two equal phases -- is
expected to use 1 Bcf/d of natural gas.
"Sasol is only one the several companies we are working with in the
province for downstream oil and gas investments. An investment decision was
recently announced for the Redwater heavy oil refinery. Also, Williams Energy
is planning a [propane dehydrogenation] facility and in early November Keyera
Energy said they will expand their NGL processing complex. We now see more of
an interest in Alberta's downstream sector than earlier," Riemer said.
On November 8, a partnership of Canadian Natural Resources and North
West Upgrading said it would move ahead with the first-phase development of
the new refinery, committing to invest C$5 billion (US$5.02 billion).
This was followed by Williams Energy saying it would invest C$500
million-C$600 million to set up new natural gas liquids and olefins
processing facilities in the province.
At the same time, Keyera Energy said it would spend C$300 million in
2013 to expand its two existing facilities in Alberta. One project involves
installing a 30,000 b/d de-ethanizer column at its Fort Saskatchewan gas
fractionation and storage facility to process an ethane-rich mix of NGLs.
The second project is the construction of a 400,000-Mcf/d turbo expander at
the Rimbey gas plant for NGL recovery, including extracting up to 20,000 b/d
of ethane as well as incremental propane, butane and condensate.
--Ashok Dutta, email@example.com
--Edited by Lisa Miller, firstname.lastname@example.org