West Canada production is off to a strong start this summer, gaining almost 200 MMcf/d summer-to-date from this time last year
Associated gas has driven these gains, as oil production has recovered since last spring's collapse as the pandemic was swinging into full effect
These factors will continue to support production in Western Canada, although Platts expects a full recovery is still a year or two away
A version of this Spotlight from S&P Global Platts Analytics was first published May 11.
Not registered?
Receive daily email alerts, subscriber notes & personalize your experience.
Register NowWest Canada dry production is off to a strong start this summer, gaining 200 MMcf/d this summer-to-date over last summer-to-date, for an average of 16.1 Bcf/d since the start of April. These gains are from associated gas production recovering from last spring's pandemic driven oil price collapse. This dynamic will continue to boost summer-over-summer production, and this Spotlight is part one of a two-part series looking into production this summer.
Note: unless otherwise noted, all production figures here are gross gas volumes.
The "West Canada associated gas production" graph shows oil associated gas production in Western Canada, and the sharp drop that occurred right as the pandemic took hold last April. Producers shut in wells in April/May in response to WTI going negative and remaining weak. They then brought them back online over the next couple of months as prices recovered, which explains the quick, yet partial, production rebound.
Despite the partial rebound, summer 2020 oil associated gas production fell 230 MMcf/d from summer 2019, and by January 2021 it recovered just 150 MMcf/d of this loss. Production has not fully recovered as drilling activity plummeted during the pandemic. It has since recovered somewhat, but Platts expects that a full recovery in oil associated gas production is still a year or more away.
So, while associated gas from oil production is expected to be up summer-over-summer, the gains could be limited to the roughly 150 MMcf/d that has already shown up.
Associated gas from wells that are targeting condensate also fell last summer but has more than recovered and is contributing to this summer's gains over last. The "Condensate prices and gas production..." graph shows how condensate outright prices (blue bars) and also condensate's differential to WTI (orange bars) fell during spring 2021.
Condensate trades off WTI, so prices tanked in the spring as WTI prices fell, but as oil prices fell operators in the oil sands lowered their output and moved up maintenances planned for the fall to the summer. Condensate's primary demand source comes from the oil sands, as the thick bitumen produced in this region must be thinned with a light oil, such as condensate, to make it less viscous and able to flow in a pipeline. When oil sands producers cut bitumen production, it cut demand for condensate and turned the light oil's typical premium to WTI to a discount, further depressing prices and condensate production.
Last summer's condensate production fell 100 MMcf/d from summer 2019, or 150 MMcf/d if we discount a strong rebound that began in October. October's strong rebound came when oil sands production returned with the typical fall/shoulder season turnarounds completed ahead of schedule in the summer. This, coupled with some expansions that were coming online, drove oil sands output to new all-time highs by the winter, and the graph shows how this erased condensate's discount to WTI and drove associated gas production to 4.3 Bcf/d by late 2020/early 2021, or about 0.4-0.5 Bcf/d higher than summer 2020.
Production from gas-focused wells looks to be dragging on total gas production, as strong injections last summer helped insulate AECO from the weakness that hammered oil markets. While prices encouraged steady production, drilling activity was relatively weak, and production from gas-focused wells during the first three months of winter 2020-2021 was down about 300 MMcf/d from the same months during the winter prior.
Given that total West Canada dry production volumes are up 250 MMcf/d this summer-to-date over last, while gas production from oil wells was up 150 MMcf/d this winter through January over last and gas production from condensate wells was up 0.4-0.5 Bcf/d, when this lagged data catches up to April it is reasonable to assume that gas production is still lagging from this time last year. However, drilling activity and producer sentiment looks supportive of production going forward this summer.
Check back in the coming days for a dive into how rigs, wells drilled, and the growing DUC count are driving Platts' expectations that production will grow this summer and into next winter.
"gas" - Google News
May 19, 2021 at 07:00PM
https://ift.tt/3fw7doe
Spotlight: Associated gas supporting West Canada production - S&P Global
"gas" - Google News
https://ift.tt/2LxAFvS
https://ift.tt/3fcD5NP
Bagikan Berita Ini
0 Response to "Spotlight: Associated gas supporting West Canada production - S&P Global"
Post a Comment