Relevant • Independent • Objective
PAGE 1
March 2010
CERI Commodity Report - Natural Gas
CERI COMMODITY REPORT - NATURAL GAS
Editor-in-Chief: Mellisa Mei ([email protected])
CONTENTS
FEATURED ARTICLE................................................ 1
NATURAL GAS PRICES ........................................... 2
WEATHER ............................................................... 4
CONSUMPTION AND PRODUCTION ......................... 6
TRANSPORTATION ................................................. 8
STORAGE ................................................................10
LIQUEFIED NATURAL GAS ......................................13
DRILLING ACTIVITY................................................15
2010 INDUSTRY EVENTS ........................................17
The Canadian Energy ResearchInstitute – A Year of Renewal,and Rebirth
The past several years have been a period of great successfor the Canadian Energy Research Institute (CERI). WhileCERI has experienced many challenges, fiscal year 2010 (April1, 2010 to May 31, 2011) represents a year of renewal, andrebirth for the organization.
CERI exists primarily to provide objective,independent, and relevant research and analysis oncritical energy and environmental issues. In carrying outthis mission, CERI contributes to expanding thecountry’s knowledge base on key energy issues facingCanadians in these tumultuous times.
In order to focus and maximize the benefits of CERI’sresearch, the Board of Directors has decided to restructurethe organization, and implement a new business model thatrelies solely on sponsorships to fund research, and to makethat research as widely available as possible. The organizationwill no longer conduct customer-specific research. Rather,the organization will focus all of its efforts on producing high
quality research on key issues of interest to governmentsand industry. Our next fiscal year, which began April 1, 2010,will be a transition year, in which the new business modelwill be put into operation.The funding of the 2010/2011research budget has been committed, and will be sharedequally by the provincial government, the federalgovernment, and industry, to fund three research projects.There have been some discussions with industryrepresentatives regarding options to secure industry’s shareof funding in an efficient and equitable manner. An optionthat has emerged as a consensus is to use the Broad IndustryInitiatives (BII) program to collect industry’s share. The SmallExplorers and Producers Association of Canada (SEPAC) Boardhas ratified this approach, while on the Canadian Associationof Petroleum Producers (CAPP) side, the BII committee hasrecommended approving this approach.
On behalf of CERI and the staff, I would like to express ourappreciation of your continuing support, which has enabledCERI to provide important economic analyses and insightson energy and environmental issues over the last 35 years.The Canadian Energy Research Institute’s sponsors grouphas approximately 100 members: producers, transportationand service companies, end-users, financial institutions,associations, universities, and other organizations. As well,various federal, provincial, municipal, regional and localgovernments and their regulatory and monitoring agenciesalso sponsor CERI.
We wanted to bring these developments to your attentionas CERI firmly believes that this new mandate will positionthe organization to better provide valuable research andpolicy direction to industry and governments. While thecommodity reports may undergo some changes, they willcontinue to be published. The 2010 oil conference (April19/20th) will be going ahead as planned. If you are notalready attending, I encourage you to register and attendthe oil conference, not only to show your support for CERI,but also to hear from our excellent panel of speakers, andnetwork with fellow guests.
If you have any questions or comments, please do nothesitate to contact myself, or any of our dedicated staffmembers.
Peter HowardInterim President & CEOCanadian Energy Research Institute
CERI Commodity Report - Natural Gas
PAGE 2
SOU
RCE
: C
ERI,
Pla
tts
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aily
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ly P
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SOU
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ly P
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SOU
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ly P
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03Ja
n-04
Jan-
05Ja
n-06
Jan-
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n-08
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09Ja
n-10
US$
/MM
Btu
AEC
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ry H
ub
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tial
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inni
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th S
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PAGE 3
SOU
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: C
ERI,
Can
adia
n G
as A
ssoc
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n, S
tatis
tics
Cana
da.
SOU
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SOU
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SOU
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anad
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Gas
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NO
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0
100
200
300
400
500
600
700
800
900
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2009
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egre
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ays
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100
200
300
400
500
600
700
800
900
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ay-0
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-08
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sum
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0
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400
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600
700
800
900
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0
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ting
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ree
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400
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CER
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CERI Commodity Report - Natural Gas
PAGE 4
SOU
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: E
nviro
nmen
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nada
.SO
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: E
nviro
nmen
t Ca
nada
.
SOU
RCE
: N
OAA
.SO
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: N
OAA
.
Relevant • Independent • Objective
PAGE 5
SOU
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: N
OAA
.SO
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: N
OAA
.
SOU
RCE
: E
nviro
nmen
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nada
.
Nor
th A
mer
ican
Wea
ther
•Env
ironm
entC
anad
ais
pred
ictin
ga
war
mer
than
norm
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onac
ross
the
entir
eco
untry
.•F
rom
April
toJu
ne,
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CERI Commodity Report - Natural Gas
PAGE 6
SOU
RCE
: S
tatis
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SOU
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: S
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10
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BC
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sum
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y S
ect
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Relevant • Independent • Objective
PAGE 7
SOU
RCE
: S
tatis
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NEB
.SO
URCE
: S
tatis
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.
SOU
RCE
: S
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tics
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NEB
.SO
URCE
: S
tatis
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2.5
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Sabl
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re E
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sche
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d 20
day
out
age.
CERI Commodity Report - Natural Gas
PAGE 8
SOU
RCE
: C
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SOU
RCE
: C
ERI.
SOU
RCE:
N
EB.
SOU
RCE:
N
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PAGE 9
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CERI Commodity Report - Natural Gas
PAGE 10
SOU
RCE
: C
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Gas
Dai
ly.
SOU
RCE
: C
ERI,
Pla
tts
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ly.
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: C
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tts
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ly.
SOU
RCE
: C
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ly.
0
100
200
300
400
500
600
700
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MA
MJ
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adia
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0
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Relevant • Independent • Objective
PAGE 11
SOU
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perc
ent
abov
eth
e5-
year
aver
age.
•Nat
ural
gas
with
draw
als
from
US
stor
age,
durin
gM
arch
,w
ere
58pe
rcen
tbe
low
the
5-ye
arav
erag
eof
238
BC
F.•T
hevo
lum
eof
natu
ralg
asw
ithdr
awn
from
US
stor
age
durin
gth
e20
09/2
010
win
ter
heat
ing
seas
onto
tale
d2.
2TC
F,ex
ceed
ing
with
draw
als
mad
edu
ring
the
prev
ious
win
terb
y26
perc
ent.
•Abo
veav
erag
ein
ject
ions
ofna
tura
lgas
into
Can
adia
nan
dU
Sst
orag
ear
eex
pect
eddu
ring
the
mon
thof
Apr
il,as
wea
ther
fore
cast
sar
epr
edic
ting
norm
alto
abov
eno
rmal
tem
pera
ture
s.
CERI Commodity Report - Natural Gas
PAGE 12
SOU
RCE
: C
ERI,
Pla
tts
Gas
Dai
ly.
SOU
RCE
: C
ERI,
Pla
tts
Gas
Dai
ly.
SOU
RCE
: C
ERI,
Pla
tts
Gas
Dai
ly.
SOU
RCE
: C
ERI,
Pla
tts
Gas
Dai
ly.
-100-8
0
-60
-40
-20020406080100
JF
MA
MJ
JA
SO
ND
5-Ye
ar A
vg.
2009
2010
US
Wes
tern
Con
sum
ing
Reg
ion
Sto
rage
In
ject
ions
/Wit
hdra
wal
sBC
F, M
onth
End
-700
-500
-300
-10010
0
300
500
JF
MA
MJ
JA
SO
ND
5-Ye
ar A
vg.
2009
2010
US
Eas
tern
Sto
rage
In
ject
ions
/Wit
hdra
wal
sB
CF,
Mon
th E
nd
-250
-200
-150
-100-5
0050100
150
200
JF
MA
MJ
JA
SO
ND
5-Ye
ar A
vg.
2009
2010
US
Pro
duci
ng R
egio
n S
tora
ge
Inje
ctio
ns/W
ithd
raw
als
BC
F, M
onth
End
-100
0
-800
-600
-400
-2000
200
400
600
800
JF
MA
MJ
JA
SO
ND
5-Ye
ar A
vg.
2009
2010
US
Sto
rage
In
ject
ions
/Wit
hdrw
als
BC
F, M
onth
End
Relevant • Independent • Objective
PAGE 13
SOU
RCE
: U
.S.
DO
E.SO
URCE
: U
.S.
DO
E.
SOU
RCE
: U
.S.
DO
E.SO
URCE
: U
.S.
DO
E.
024681012141618202224
Feb-
09A
pr-0
9Ju
n-09
Aug
-09
Oct
-09
Dec
-09
Feb-
10
Cove
Poi
ntEl
ba Is
land
Ever
ett
NE
Gat
eway
Eas
tern
US
LN
G Im
port
s B
y Fa
cilit
yB
CF
024681012141618202224
Feb-
09A
pr-0
9Ju
n-09
Aug
-09
Oct
-09
Dec
-09
Feb-
10
Gul
f Gat
eway
Free
port
Lake
Cha
rles
Sabi
ne P
ass
Cam
eron
US
GO
M L
NG
Im
port
s B
y Fa
cilit
yB
CF
0510152025303540
Feb-
09A
pr-0
9Ju
n-09
Aug
-09
Oct
-09
Dec
-09
Feb-
10
Egyp
tN
iger
iaTr
inid
adNo
rway
BC
F
US
LN
G Im
port
s B
y O
rigi
n
02468101214
JF
MA
MJ
JA
SO
ND
2008
2009
2010
Vol
ume-
Wei
ghte
d A
vera
ge L
NG
Pri
ceV
olum
e-W
eigh
ted
Ave
rage
LN
G P
rice
Vol
ume-
Wei
ghte
d A
vera
ge L
NG
Pri
ceV
olum
e-W
eigh
ted
Ave
rage
LN
G P
rice
US$
/MM
Btu
CERI Commodity Report - Natural Gas
PAGE 14
SOU
RCE
: N
EB a
nd U
S D
OE.
SOU
RCE
: E
IA,
U.S
. D
OE.
SOU
RCE
: U
.S.
DO
E.
01234567
Feb-
09A
pr-0
9Ju
n-09
Aug
-09
Oct
-09
Dec
-09
Feb-
10
US
LN
G E
xpor
ts t
o Ja
pan
BC
F
01234567
Feb-
09A
pr-0
9Ju
n-09
Aug
-09
Oct
-09
Dec
-09
Feb-
10
Con
ocoP
hilli
psM
arat
hon
US
LN
G E
xpor
tsB
y E
xpor
ter
BC
F
LNG
Im
port
ers
and
Shi
pper
s
Can
adia
n LN
G I
mpo
rter
s in
201
0 (A
s of
Jan
uary
31,
201
0)
Com
pany
Vol
ume
(BCF
)%
of
Tota
l LN
G Im
port
s
Rep
solE
nerg
y C
anad
a Lt
d.14
.610
0To
tal
14.6
100
U.S
. LN
G Im
port
ers
in 2
010
(As
of F
ebru
ary
28, 2
010)
Com
pany
Vol
ume
(BC
F)%
of
Tota
l LN
G
Impo
rts
BG
LN
G S
ervi
ces
20.2
19.8
Dis
trig
as27
.827
.2E
xcel
erat
e14
.013
.7S
tato
il14
.714
.4B
P E
nerg
y C
ompa
ny8.
88.
6To
tal G
as &
Pow
er12
.512
.3S
empr
a LN
G M
arke
ting
4.2
4.1
Tota
l10
2.2
100.
0
LNG
Shi
pper
s to
the
U.S
. in
2010
(A
s of
Feb
ruar
y 28
, 201
0)
Com
pany
Vol
ume
(BC
F)%
of
Tota
l LN
G
Shi
pmen
ts
Atla
ntic
LN
G 2
/3 C
ompa
ny2.
62.
5A
tlant
ic L
NG
Com
pany
5.4
5.3
BG
9.1
8.9
ELN
G/B
GG
M14
.614
.3
Gas
Nat
ural
Apr
ovis
iona
mie
ntos
5.8
5.6
Atla
ntic
LN
G8.
88.
6Tr
inlin
g5.
65.
5G
DF
Sue
z14
.113
.8R
asG
as6.
36.
2Q
atar
Liq
uefie
d G
as C
ompa
ny L
imite
d (II
)9.
39.
1R
as L
affa
n2.
82.
7
Sta
toil
AS
A, R
WE
-Dea
Nor
ge A
S,
Hes
s N
orge
AS
5.8
5.7
BG
Gas
Mar
ketin
g Lt
d3.
03.
0S
tato
il A
SA
5.9
5.8
Yem
en L
NG
Com
pany
Ltd
.; TO
TAL
Gas
& P
ower
Ltd
.3.
33.
2To
tal
102.
210
0.0
US
LN
G R
e-E
xpor
t U
pdat
e
•Con
ocoP
hillip
s, w
hich
ow
ns 5
0 pe
rcen
t of t
he F
reep
ort L
NG
faci
lity,
was
gra
nted
au
thor
izat
ion
to re
-exp
ort u
p to
500
BC
F of
fore
ign
sour
ced
LNG
from
the
Free
port
LNG
te
rmin
al in
Nov
embe
r 200
9.•In
Mar
ch 2
010,
Fre
epor
t LN
G s
ubm
itted
an
appl
icat
ion
to a
men
d th
e U
S D
OE’
s or
igin
al
expo
rt au
thor
izat
ion,
to a
llow
the
re-e
xpor
t of f
orei
gn s
ourc
ed L
NG
to a
ny c
ount
ry (i
nclu
ding
th
ose
prev
ious
ly a
ppro
ved)
that
is c
apab
le o
f im
porti
ng L
NG
, and
with
whi
ch tr
ade
is n
ot
proh
ibite
d by
U.S
. law
.•C
heni
ere
Mar
ketin
g ha
s fil
ed a
n ap
plic
atio
n w
ith th
e U
S D
OE
in M
arch
, to
amen
d th
e or
igin
al e
xpor
t aut
horiz
atio
n is
sued
for S
abin
e Pa
ss, t
o in
crea
se th
e cu
mul
ativ
e re
-exp
ort
volu
me
limit
from
64
BCF
to 5
00 B
CF
over
two
year
s, a
nd a
llow
the
re-e
xpor
t of f
orei
gn
sour
ced
LNG
to a
ny c
ount
ry (i
nclu
ding
thos
e pr
evio
usly
app
rove
d) th
at is
cap
able
of
impo
rting
LN
G, a
nd w
ith w
hich
trad
e is
not
pro
hibi
ted
by U
.S. l
aw.
•Citi
grou
p En
ergy
exp
orte
d 2.
7 BC
F of
LN
G fr
om th
e Fr
eepo
rt LN
G te
rmin
al in
Dec
embe
r 20
09, a
nd 3
.4 B
CF
of L
NG
from
the
Sabi
ne P
ass
LNG
term
inal
in M
arch
201
0.
Sou
rce:
US
DO
ES
ourc
e: U
S D
OE
01234
JF
MA
MJ
JA
SO
ND
Free
port
LNG
Impo
rts (B
CF)
5-Ye
ar A
vg.
2008
2009
2010
02468
JF
MA
MJ
JA
SO
ND
Sabi
ne P
ass
LNG
Impo
rts (B
CF)
5-Ye
ar A
vg.
2008
2009
2010
Relevant • Independent • Objective
PAGE 15
SOU
RCE
: C
ERI,
CAO
DC,
Bak
er H
ughe
s.SO
URCE
: C
ERI,
CAO
DC.
SOU
RCE
: C
ERI,
CAO
DC.
SOU
RCE
: C
ERI,
CAO
DC.
0
500
1,00
0
1,50
0
2,00
0
2,50
0
3,00
0 Jan-
02Ja
n-03
Jan-
04Ja
n-05
Jan-
06Ja
n-07
Jan-
08Ja
n-09
Jan-
10
WCS
BUS
Nor
th A
mer
ican
Act
ive
Rig
sR
igs
0
100
200
300
400
500
600
700
800
900
1,00
0 Jan-
02Ja
n-03
Jan-
04Ja
n-05
Jan-
06Ja
n-07
Jan-
08Ja
n-09
Jan-
10
Act
ive
Rig
sTo
tal R
ig D
rillin
g Fl
eet
Can
adia
n R
ig F
leet
Uti
lizat
ion
Wee
kly
Ave
rag
e A
ctiv
e R
igs
Rig
s
0
100
200
300
400
500
600
700 Ja
n-08
Mar
-08
Jun-
08Se
p-08
Dec-
08M
ar-0
9Ju
n-09
Sep-
09D
ec-0
9M
ar-1
0
BC
AB
SK
WC
SB
Act
ive
Rig
s by
Pro
vinc
eW
eekl
y A
vera
ge
Rig
s
-
100
200
300
400
500
600
700
800
15
913
1721
2529
3337
4145
49
5-Ye
ar A
vg.
2009
2010
Wes
tern
Can
ada
Act
ive
Rig
sW
eekl
y A
vera
ge
Rigs
Wee
k N
umbe
r
CERI Commodity Report - Natural Gas
PAGE 16
SOU
RCE
: C
ERI,
Bak
er H
ughe
s.SO
URC
E:
CERI
, Ba
ker
Hug
hes.
SOU
RCE:
CE
RI,
Bake
r H
ughe
s.
0
500
1,00
0
1,50
0
2,00
0
2,50
0 Jan-
02Ja
n-03
Jan-
04Ja
n-05
Jan-
06Ja
n-07
Jan-
08Ja
n-09
Jan-
10
Ons
hore
Gas
-Dir
ecte
dG
OM
Gas
-Dire
cted
Tota
l Oil-
Dire
cted
Rig
s
US
Tot
al A
ctiv
e R
igs
0 20
40
60
80
100
120
140 Ja
n-02
Jan-
03Ja
n-04
Jan-
05Ja
n-06
Jan-
07Ja
n-08
Jan-
09Ja
n-10
Oil-
Dire
cted
Gas
-Dir
ecte
d
US
Gul
f of
Mex
ico
Act
ive
Rig
sR
igs
In M
arch
, the
ave
rage
num
ber o
f gas
-di
rect
ed G
OM
rig
s in
crea
sed
to 2
4 rig
s,
follo
win
g fiv
e m
onth
s of
dec
linin
g ac
tivity
.0%10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
200
400
600
800
1,00
0
1,20
0
1,40
0
1,60
0
1,80
0
2,00
0
2,20
0 Jan-
02Ja
n-03
Jan-
04Ja
n-05
Jan-
06Ja
n-07
Jan-
08Ja
n-09
Jan-
10
Oil-
Dire
cted
Gas
-Dire
cted
Gas
-Dire
cted
%
US
Tot
al A
ctiv
e R
igs
Rig
s
Nor
th A
mer
ican
Rig
Act
ivit
y
•The
mon
thly
aver
age
WC
SB
rigut
iliza
tion
rate
decl
ined
to44
perc
enti
nM
arch
.H
owev
er,t
hecu
rren
trig
utiliz
atio
nra
teis
97pe
rcen
tgr
eate
rth
anth
eut
iliza
tion
rate
reco
rded
inM
arch
2009
.•D
urin
gth
em
onth
ofM
arch
,the
num
ber
ofrig
sop
erat
ing
inth
eW
CS
Bde
clin
edby
appr
oxim
atel
y31
perc
ent,
toan
aver
age
of35
0rig
s.•N
early
75pe
rcen
toft
hede
clin
ein
activ
eW
CSB
rigs
was
attri
buta
ble
toA
lber
ta.
•Mon
th-o
ver-
mon
th,
Sask
atch
ewan
and
Brit
ish
Col
umbi
aex
perie
nced
a12
perc
enta
nd10
perc
entd
eclin
ein
rigac
tivity
,res
pect
ivel
y.•In
Mar
ch,t
heto
taln
umbe
rofr
igs
oper
atin
gin
the
US
incr
ease
dby
5pe
rcen
t,or
69rig
sfro
mth
epr
evio
usm
onth
,to
1419
rigs.
•The
mon
thly
aver
age
incr
ease
into
tal
US
gas
rigs
exce
eded
the
aver
age
incr
ease
into
talo
ilrig
sby
64pe
rcen
t.•O
n-sh
ore
natu
ralg
as-d
irect
edrig
activ
ityin
crea
sed
byan
aver
age
of39
rigs
inM
arch
,w
hile
the
aver
age
num
ber
ofrig
sop
erat
ing
inth
eG
OM
incr
ease
dby
3rig
s.•D
urin
gQ
120
10,
natu
ral
gas-
dire
cted
rigs
acco
unte
dfo
ran
aver
age
of66
perc
ento
ftot
alU
Srig
s,do
wn
from
78pe
rcen
tin
Q1
2009
,and
81pe
rcen
tin
Q1
2008
.
Relevant • Independent • Objective
PAGE 17
2010 Industry Events Calendar
For further information on these conferences, visit our website at www.ceri.caTo register, contact Capri Gardener at [email protected] or 403-220-2380
CERI 2010 Oil ConferenceMarkets, Margins and Message:
Oil in an Age of Uncertainty
Often the oil market is seen simply as the interaction ofsupply and demand. But it is becoming ever clearer thatthe Canadian oil market may be experiencing somefundamental changes that will impact on how we participatein future markets; what our margins are going to be, andperhaps most importantly, what our message should be.
Fairmont Palliser, Calgary, AlbertaApril 18-20, 2010
CERI 2010 Petrochemical Conference
As the first signs of an economic recovery start tomaterialize and the survivors start ramping up production,will the market be the same as before or has the gamechanged? Alberta’s gas industry is still in the doldrumsand NGL supply is declining as a result of declining gasproduction, precipitated by soft market prices. On thehorizon is the growing potential for the Marcellus shalegas play in the US to become a significant NGL supplier tothe Sarnia area, which has been one of Alberta’s long-time markets. Feedstock issues, the unknown elementsof climate change policy, and the long-term issue ofIndustry competitiveness are all issues that are extremelyimportant to both Government and Industry.
Delta Lodge at Kananaskis, AlbertaJune 6-8, 2010