The best news and the biggest development in western Canada's gas and oil industry in recent years. That's the way industry executives, here in Calgary Canada's oil capitol, termed the significance of the U.S. FEDERAL POWER COMMISSION'S authorization for a U.S. pipeline company to import approximately 300 million cubic feet of Canadian natural gas daily.
The F.P.C. approved plans by PACIFIC NORTHWEST PIPELINE CORPORATION to import 303,462,000 cubic feet a day from a point on the British Columbia Washington state border. The gas will be supplied by WESTCOAST TRANSMISSION COMPANY LIMITED from gas fields in the Peace River area of Alberta and British Columbia.
Oilmen who could be reached in Calgary when the announcement was released late Friday afternoon said the F.P.C. unanimous favorable decision was a great shot in the arm for the industry. Their quick observations, without details of the F.P.C. decision, were to the effect that drilling activities would be stepped up greatly in northeastern British Columbia and northwestern Alberta. The move, it is believed, will provide the necessary incentive for a more concentrated search for gas in the Peace River region.
A statement released to the press in Calgary, on behalf of Westcoast president, Frank M. McMahon, stated that work on the Westcoast Transmission Company's project, comprising over 800 miles of pipeline, is now under way. The statement also predicted an immediate start of the most extensive drilling program in the history of northern Canadian fields.
Following is Mr. McMahon's statement:
"The decision of the Federal Power Commission to allow the importation of Canadian natural gas into the northwest section of the United States is the culmination of years of effort by Westcoast Transmission Company Limited.
"The authorization granted today to Pacific Northwest Pipeline Corporation to import 300 million cubic feet a day of gas means the Westcoast Transmission Company will be able to complete its 150 million-dollar pipeline through British Columbia by early 1957. This will be the first major natural gas line in Canada, and it will be one of the most important steps in the forward advance of the Canadian oil and natural gas industry.
"The Westcoast line will amply supply all requirements for domestic and industrial consumption in the Province of British Columbia. Through its connection with the Pacific Northwest pipeline and that company's interconnection with other major transmission lines, the Westcoast project will also provide an outlet for Canadian gas within the whole of the Western United States. Based on the industry's experience, this means increasing demands upon the gas resources of the Peace River fields to supply the market.
"The decision of the Federal Power Commission is another example of cooperation between our two countries. Canada, with its limits resources of surplus natural gas and yet with too small a population to justify the cost of moving the gas from the fields through long distance pipelines to its populated areas, requires the United States markets. The United States in turn needs additional sources of a fuel which it will now obtain from Canada and by so doing establish a new great Canadian industry.
"Work on the Westcoast Transmission Company's project, comprising over 800 miles of pipeline, is now under way. The pipeline, when in full operation, will be capable of delivering 660 million cubic feet of natural gas a day to consumers in British Columbia and the United States, which represents more energy than the combined output of the Grand Coulee Bonneville hydroelectric projects.
"Employment will be given to nearly 2,000 people on the construction of the pipeline alone and in addition those who may be employed by suppliers in manufacturing centres in Canada, the United Kingdom, and the United States.
"New industries the petrochemical and many others will 'be established on the completion of the pipeline with further employment and a boost to the economy of British Columbia and the western States.
"We were pleased to be able to purchase nearly onethird of the Westcoast large diameter pipe from Britain. This $12,000,000 purchase is one of the largest single offshore orders that she has received in recent years. Such transactions are of immense benefit to Canada and Britain for it enables Britain in turn to purchase a greater volume of agricultural, forest and manufactured products from Canada.
"Construction of the Westcoast line will mean the immediate start of the most extensive drilling program in the history of the northern Canadian fields. Pacific Petroleums Ltd. and its associates alone will be drilling a minimum of 70 additional wells To process the gas, we will also need to construct gasoline plants and a 300 ton a day sulphur recovery plant. Other companies operating in the area, comprising practically every major Canadian and American oil company will likewise proceed with extensive exploration and development programs. The results of drilling up to date, together with the knowledge gained thereby, point to a rapid expansion of the present large gas reserves in the area, all of which will be available to provide for the fuel requirements of British Columbia and the Pacific Coast areas. The gas fields in British Columbia and northern Alberta are highly productive, With the potential exploration area larger even than the State of Texas, the reserves developed may eventually be as great.
"As in all new ventures, the Westcoast Transmission Company's project to link the Peace River gas fields with markets in the Western United States and Canada by a pipeline has been a lengthy and difficult job. Hearings before regulatory bodies in both Canada and the United States required long hours of preparation and many thousands of words of testimony. In retrospect, we feel that the exhaustive investigations by the authorities of both Canada and the United States were for the best. After many trials and tribulations for all concerned, we believe we have arrived at a project based on a firmer foundation and with a broader scope than the plan originally visualized.
"I wish to thank personally all those, both in Canada and the United States, who have given assistance to the Westcoast project. It is with their help that the pipeline has been successfully launched."
Friday's decision also grants the Pacific Northwest Corporation the right to export, back to Canada 12,600,000 cubic feet of gas daily to the Trail area of British Columbia. This gas is primarily for industrial use and will continue for a 20-year period. And Pacific Northwest has permission to export another 12,000,000 cubic feet of gas daily to the Vancouver area in the fall of 1957. The U.S. pipeline firm will sell the remainder of the Canadian gas to its customers in the Pacific Northwest area.
The Commission's decision also authorized EL PASO NATURAL GAS COMPANY to include ex changes of natural gas with Pacific Northwest to increase deliveries to existing customers in California, Nevada, Arizona, New Mexico and Texas. An application by Nevada Natural Gas Company to build new facilities to enable it to transport additional gas to be received from El Paso and to take on new sales was also approved. El Paso's authorized project will expand its system by 455,175,000 cubic feet of natural gas a day. Estimated to cost $194,274,000 the El Paso project calls for construction of 413 miles of 34 inch pipe from the San Juan Basin to a point on the Arizona, California border near Topock, Arizona.
Pacific Northwest estimated an investment of $246,000,000 during a five year period will be required to develop facilities to take the first gas to the northwest states. Besides sales to Canada, Pacific's plans now include service to 22 Washington and Idaho communities which it was not certified to serve when the commission authorized it last year to deliver natural gas from the San Juan Basin.
Pacific Northwest will receive the Canadian gas from Westcoast to a point near Sumas, Washington. The gas will be sold at various points on the company's system.
For the first few years, the Canadian gas will be used largely for industrial purposes. Pacific will be able to interrupt these deliveries, the commission said, to furnish firm service when required by home and commercial customers. It was stated also that the existence of the supply at the northern end of the system will facilitate plans for temporary emergency service in the event of a line break or other interruptions from other sources.
DAILY AVERAGE CRUDE OIL PRODUCTION DECREASES DURING PAST WEEK DOWN 20,883 BARRELS PER DAY FROM RECORD BREAKING PREVIOUS WEEK